‘If we had a Fed that would lower interest rates, we would be like a rocket ship…’
The U.S. economy added 224,000 net new jobs last month, smashing forecasts, the Labor Department said in the closely-watched report.
The unemployment rate ticked up to 3.7 percent as more workers stepped off the sidelines to enter the labor force.
Employers added workers in construction, financial services, education, business services, transportation and warehousing, following a disappointing May when hiring unexpectedly slowed to just 72,000.
The vigorous June rebound delighted President Donald Trump, who also touted the record numbers in the stock market Thursday as a sign of his historic economic success—despite near-constant doom-and-gloom forecasts from leftists naysayers.
Today’s Stock Market is the highest in the history of our great Country! This is the 104th time since the Election of 2016 that we have reached a NEW HIGH. Congratulations USA!
— Donald J. Trump (@realDonaldTrump) July 4, 2019
But the robust jobs report, in turn, disappointed the markets, which had been banking on an interest rate cut following a batch of soft economic data, and now see that move as less likely.
Wall Street sank into the red after the numbers were released, retreating from Wednesday’s record closes, with the benchmark Dow Jones Industrial Average down 0.8 percent at closing time on Thursday.
Some economists argue there is still enough economic uncertainty to warrant an “insurance move” by the Fed.
However, Trump—who recently likened the Federal Reserve to a “stubborn child” for dragging its feet on a rate cut to boost the economy—slammed the central bank again on Friday.
“Our country continues to do really well,” he told reporters at the White House.
“If we had a Fed that would lower interest rates, we would be like a rocket ship,” he said, “but we don’t have a Fed that knows what they’re doing.”
Will the Fed disappoint?
Economist Joel Naroff noted the irony of investors rooting for weak numbers in the belief that a rate cut would prolong the rally in stocks.
“Indeed, there seems to be a perverse view that good is bad and bad is good,” he said.
There were some weak spots in the jobs numbers, however. Auto manufacturing employment contracted again, though marginally, meaning it has been down for five of the last eight months.
And the retail sector’s woes also continued, shedding another six thousand workers in the fifth straight month of losses.
Even with the latest gains, average job creation in the first half of this year has slowed to 172,000 a month, from 223,000 in all of 2018.
Wage growth in June also fell short of expectations, as average hourly earnings rose 0.2 percent to $27.90 an hour, slower than the 0.3 percent economists had been expecting.
But worker pay was up 3.1 percent compared to the same month last year, and has been at or above three percent for 11 straight months, steadily outpacing inflation and delivering more purchasing power to wage earners.
Meanwhile, more people came off the sidelines to look for work, which pushed the unemployment rate back up to 3.7 percent, still very low by historical standards.
Employers across the country have been complaining for months about the shortage of available and qualified labor, and reporting that they have had to increase benefits and offer more training to retain workers.
The Fed last month opened the door to an interest rate cut amid rising uncertainties about the economy, including Trump’s multifront trade conflicts.
Despite Wall Street’s fear the strong job gains could delay a move, economists said the Fed was still likely to cut rates as insurance against a weakening global economy.
Futures markets as of Friday morning put the odds of a rate cut this month at 97.7 percent, with at least one more expected later this year.
“The economy does not need the Fed to ease but the market continues to scream for action on July 31,” Ian Shepherdson of Pantheon Macroeconomics said in a note to clients.
“This Fed won’t disappoint.”
Liberty Headlines’ Ben Sellers contributed to this report.
© Agence France-Presse