Tag Archives: trade war

U.S. job growth surges; annual wage gain largest since 2009

A man holds his briefcase while waiting in line during a job fair in Melville, New York July 19, 2012. REUTERS/Shannon Stapleton

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth accelerated in August and wages notched their largest annual increase in more than nine years, strengthening views that the economy was so far weathering the Trump administration’s escalating trade war with China.

The Labor Department’s closely watched employment report published on Friday also showed slack in the jobs market was rapidly diminishing, with a broader measure of unemployment falling to a level not seen since 2001. The report cemented expectations for a third interest rate increase from the Federal Reserve this year when policymakers meet on Sept. 25-26.

“The economy is on an adrenalin rush,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania. “Given the amount of fiscal stimulus that the economy is benefiting from, it’s going to take a lot to get it off that high.”

Nonfarm payrolls surged by 201,000 jobs last month, boosted by hiring at construction sites, wholesalers and professional and business services, the Labor Department said. There were also gains in transportation and healthcare employment.

Job growth averaged 185,000 per month in the past three months. The economy needs to create 120,000 jobs per month to keep up with growth in the working-age population.

Average hourly earnings increased 0.4 percent, or 10 cents in August after rising 0.3 percent in July. That raised the annual increase in wages to 2.9 percent in August, the largest gain since June 2009, from 2.7 percent in July.

A broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment, fell one-tenth of a percentage point to 7.4 percent, the lowest level since April 2001. The unemployment rate was unchanged at 3.9 percent.

Economists polled by Reuters had forecast nonfarm payrolls increasing by 191,000 jobs last month and the unemployment rate falling to 3.8 percent. The economy created 50,000 fewer jobs in June and July than previously reported.

The dollar firmed against a basket of currencies after the report, while U.S. Treasury yields rose. U.S. stock index futures extended losses.

Analysts say the administration’s $1.5 trillion tax cut package and increased government spending were shielding the economy from the trade tensions, which have also seen Washington engaged in tit-for-tat tariffs with other trade partners, including the European Union, Canada and Mexico.

They also note that the import duties implemented so far have affected only a small portion of the American economy, but warned this could change if President Donald Trump pressed ahead with additional tariffs on Chinese imports.

The United States and China have slapped retaliatory tariffs on a combined $100 billion of products since early July.

LIMITED IMPACT FROM TARIFFS

Americans had until Thursday to comment on a list of $200 billion worth of Chinese goods widely expected to be hit with tariffs soon. The government imposed import duties on goods including steel, aluminum, washing machines, lumber and solar panels early this year to protect American industries from what Trump says is unfair foreign competition.

Global outplacement firm Challenger, Gray & Christmas said on Thursday there were 521 tariff-related job cuts in August, but these were largely offset by the hiring of 359 workers by steel producers.

The employment report added to manufacturing and services industries surveys in suggesting the Trump administration’s protectionist trade policy was having a marginal impact on the economy for now. The economy grew at a 4.2 percent annualized rate in the second quarter, almost double the 2.2 percent pace set in the January-March period.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell two-tenths of a percentage point to 62.7 percent last month, putting a wrinkle on an otherwise upbeat employment report.

Job gains in August were almost across all sectors, though manufacturing payrolls fell by 3,000. That was the first drop since July 2017 and followed an increase of 18,000 in July. Manufacturing employment was weighed down by declines in machinery, computer and electronic products and motor vehicle and parts industries.

Construction companies hired 23,000 more workers last month. They increased payrolls by 18,000 jobs in July. Wholesalers added 22,400 jobs last month. Payrolls in the professional and business services industries rose by 53,000 jobs in August.

Employment at sporting goods, hobby, book and music stores rebounded by 9,200 jobs in August after shedding 30,300 jobs in July related to the closing of all Toys-R-Us stores.

But retail payrolls fell 5,900 last month and government shed 3,000.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Predicting Trump: Chinese turn to fortune tellers to divine trade war

FILE PHOTO: A worker places U.S. and China flags near the Forbidden City ahead of a visit by U.S. President Donald Trump to Beijing, in Beijing, China November 8, 2017. REUTERS/Damir Sagolj/File Photo

SHANGHAI (Reuters) – As analysts crunch trade data and political commentators dissect official statements for signs of how the Sino-American trade war will develop, some ordinary Chinese are using different sources to predict U.S. President Donald Trump’s next moves: fortune tellers.

Armed with photos of Trump and his date of birth, the superstitious in China are turning to the divine – from masters on cosmic energy to experts on ancient spirits – for tips on what the president has got up his sleeve in the escalating trade spat between the world’s two largest economies.

The trade dispute has not only raised uncertainty over China’s economic growth, it has also unsettled the lives of some ordinary Chinese people, who are seeking advice on things like where to invest, how to run their business and even whether or not they should pursue plans to emigrate to the United States.

Victor Ng, a Feng Shui master from a line of famous practitioners in Hong Kong, says he usually analyses the birth date and time of birth of his clients for insights. With the trade row dominating headlines and increasing uncertainty about the future, he has been adding some ingredients to the mix.

“Because this time the U.S.-China trade war is ongoing, I will also look at the fate of the leaders of the U.S. and China – for instance, Xi Jinping’s birth date and the birth date of Donald Trump. This is how we analyze the situation,” he said.

In the western city of Xi’an, fortune teller Xie Xianglin says he has seen “many, many more” people approaching him for readings on the future of the trade war. Most are entrepreneurs and investors, said Xie, who charges 500 yuan ($73) to analyze the relevant spirits.

“Seven people have asked about investment and also about emigration trends,” he said of recent visitors.

In Shanghai’s leafy Fuxing Park, for at least three weekends in a row in July, heated debate broke out intermittently between retirees discussing the victims and villains of the trade war.

The park is an unofficial meeting ground for retirees at the weekend – and more recently, some have appeared there brandishing photos of Trump and his birth date looking for tips on his next step, said three people who had seen it happen.

Chinese people, including the country’s leaders, have a long tradition of putting their faith in soothsaying and geomancy, looking for answers in times of doubt, need and chaos.

Members of the ruling Communist Party, however, are officially banned from participating in what the government dubs superstitious practices, including visiting soothsayers.

For investment broker Ricky Fong, readings by Ng, a master of the ancient Chinese belief in a system of laws that governs energy, or Feng Shui, have helped him navigate the impact of the trade war on his business.

“When it comes to the U.S.-China trade war, in my view the importance is huge, with regards to investment – really big,” said Fong, in Hong Kong.

“Master Ng gives me a lot of very detailed data to work with. When it comes to the traditional financial tools they also provide data, but the Feng Shui master gives me another kind. He can use traditional methods to read my fate, and tell me how to better handle the situation,” Fong added.

Recently, amid the trade war, Ng advised Fong to invest in Kuangchi Science Ltd <0439.HK> after a reading of the company stock number and Fong’s birth date, which Ng believes gives an indication of a person’s fortune with a particular firm. Fong says he bought at 0.375 per share and sold at 0.77 per share.

For now, at least some readings on the fate of Trump and the trade war are pointing in the right direction.

“The trade war will end up with a reconciliation in the near future,” said fortune teller Xie, who offered a free reading to Reuters.

(Reporting by Engen Tham in Shanghai and Aleksander Solum in Hong Kong; Editing by John Ruwitch and Lincoln Feast)

Fed’s Powell: ‘Several years’ of strong jobs, low inflation still ahead

Federal Reserve Chairman Jerome Powell gives his semiannual testimony on the economy and monetary policy before the Senate Banking Committee in Washington July 17, 2018. REUTERS/James Lawler Duggan

By Howard Schneider

WASHINGTON (Reuters) – U.S. Federal Reserve Chairman Jerome Powell, discounting the risk that a trade war may throw a global recovery off track, said the economy is on the cusp of “several years” where the job market remains strong and inflation stays around the Fed’s 2 percent target.

In written testimony delivered to the Senate Banking Committee on Tuesday, the Fed chair signaled not just that he believes the economy is doing well, but that an era of stable growth may continue provided the Fed gets its policy decisions right.

“With appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years,” Powell said in one of the strongest affirmations yet that the Fed is within reach of its dual policy targets more than a decade after the United States endured a deep financial crisis and recession.

The Fed “believes that – for now – the best way forward is to keep gradually raising the federal funds rate” in a way that keeps pace with a strengthening economy but does not raise rates so high or so fast that it weakens growth, Powell said.

Stock and bond markets were largely flat as Powell began his testimony, and analysts said there was little of surprise in the initial message.

“His takeaway was the job market is strong, inflation is going to stay near 2 percent. To me that means two more hikes this year,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.

Powell did not address his individual views on the appropriate pace of tightening or whether he thinks, as some of his colleagues have argued, that the Fed should pause its rate hike cycle sometime next year if inflation remains under control. But markets expect the central bank to raise rates two more times this year from the current target level of between 1.75 and 2 percent.

Powell took questions from Senators after presenting his written statement to them, and will appear before a House committee on Wednesday.

Powell and other Fed officials have in recent remarks pointedly declined to declare “victory” in their effort to hit the 2 percent inflation target, though most have acknowledged that, with joblessness at 4 percent, their employment goal has been reached.

But the Fed’s preferred measure of inflation hit 2.3 percent in May, and was right at 2 percent after excluding more volatile food and energy prices.

Inflation is “close” to the Fed’s target and “the recent data are encouraging,” Powell said as he laid out the reasons why he felt the United States’ near decade-long expansion was set to continue.

Still-low interest rates, a stable financial system, ongoing global growth and the boost from recent tax cuts and increased federal spending “continue to support the expansion” Powell said.

After a solid start to the year, growth appears to have accelerated as “robust job gains, rising after-tax incomes, and optimism among households have lifted consumer spending in recent months. Investment by businesses has continued to grow at a healthy rate,” Powell said.

Powell did nod to the uncertainty surrounding the Trump administration’s trade policies, which organizations like the International Monetary Fund have warned could curb global growth if ongoing rounds of U.S. tariffs and retaliation by other countries raise prices, lower demand, and disrupt global business supply chains.

But “it is difficult to predict the ultimate outcome of current discussions over trade policy,” he said. Overall the risks to the economy were “roughly balanced,” with the “most likely path for the economy” one of continued job gains, moderate inflation, and steady growth.

(Reporting by Howard Schneider; Additional reporting by Shruthi Shankar; Editing by Andrea Ricci)

Wall Street edges higher as strong jobs data offsets trade worries

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

By Sruthi Shankar and Savio D’Souza

(Reuters) – U.S. stocks edged higher on Friday on stronger-than-expected job growth in June, offsetting concerns from a trade war between the United States and China.

Nonfarm payrolls increased by 213,000 jobs last month, the Labor Department said, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4.0 percent and average hourly earnings rose 0.2 percent.

The moderate wage growth could allay fears of a strong build-up in inflation pressures, keeping the Federal Reserve on a path of gradual interest rate increases.

“It was what the market wanted to see: more jobs created than expected, wage growth moderate and creating jobs where you want to see them … It’s not just creating jobs it’s creating careers,” said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

The strong jobs data follows the minutes of the Federal Reserve’s latest policy meeting which showed policymakers discussed if recession lurked around the corner and expressed concerns trade tensions could hit an economy that by most measures looked strong.

Earlier stock futures were set for a more cautious start after the United States and China imposed tariffs on each other’s goods worth $34 billion, with Beijing accusing Washington of starting the “largest-scale trade war.”

President Donald Trump warned the United States may ultimately target over $500 billion worth of Chinese goods, but global markets remained broadly sanguine, though concerns about the conflict escalating capped appetite for risk.

“The expectation of things is always worse for the market than the reality,” said Kinahan. “We certainly have to pay attention to trade but it’s been expected for a long time.”

At 9:54 a.m. EDT the Dow Jones Industrial Average was down 19.67 points, or 0.08 percent, at 24,337.07, the S&P 500 was up 4.26 points, or 0.16 percent, at 2,740.87 and the Nasdaq Composite was up 34.68 points, or 0.46 percent, at 7,621.10.

Eight of the 11 major S&P sectors were higher, led by a 0.8 percent jump in the S&P healthcare index.

Biogen jumped 17.8 percent after the company and Japanese drugmaker Eisai Co said the final analysis of a mid-stage trial of their Alzheimer’s drug showed positive results.

Among the decliners were industrials, energy and materials indexes.

Boeing, the single largest U.S. exporter to China, slipped 0.7 percent and Caterpillar dropped 1.3 percent.

The Philadelphia Semiconductor index, which is made up of chipmakers most of whom rely on China for a substantial chunk of revenue, dropped 0.4 percent.

Advancing issues outnumbered decliners by a 1.65-to-1 ratio on the NYSE and by a 2.07-to-1 ratio on the Nasdaq.

The S&

P index recorded 10 new 52-week highs and two new lows, while the Nasdaq recorded 67 new highs and nine new lows.

(Reporting by Sruthi Shankar and Savio D’Souza in Bengaluru; Editing by Arun Koyyur)