Fears that a trade war would put a damper on hiring have proved unfounded so far. The June labor report was quite strong as the economy created +213k jobs, exceeding expectations of only +190k. Job gains were widespread across most industries including a strong +36k in manufacturing. The unemployment rate backed up from 3.8% to 4.0%, but it was a sign of strength as it was caused by +601k people entering the labor force, which also drove the participation rate up by +0.2pp to 62.9%. However, once again wages refused to budge, resulting in a +2.7% y/y rate, near where it has been for seven straight months. One reason wage growth has been so weak is the lack of skilled labor, which has required businesses to hire people at unskilled wages and then train them. It was the number one business problem again in this month’s NFIB survey. Demand for labor is very strong as shown by a separate labor survey reporting an elevated quits rate and a record high job openings/unemployed ratio. A trade war may hurt jobs in the future, but not yet.
