US labour market booms in June

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The US labour market boomed in June, creating many more jobs than expected, according to the latest report from the Bureau of Labor Statistics.

It showed that 224,000 jobs were created in June, many more than the 160,000 that economists had forecast.

It was also a rebound from the relatively modest number of jobs created in May.

The professional and business services sector was the biggest contributor to employment, adding 51,000.

Large numbers of jobs were also created in healthcare, transportation and warehousing.

Despite the strong job creation, wages rose 0.2% in June, keeping the annual rate at 3.1%.

The jobs data is closely watched by economists who analyse how it might affect interest rate decisions at the US Federal Reserve.

Some are betting that the Fed might lower interest rates following its next meeting which starts on 30 July.

Last month the Fed indicated that interest rates might head lower due to subdued inflation and the effects of the trade war between the US and China.

‘Fall out of bed’

“These are good numbers, but a rate cut in July is still all but inevitable,” said Luke Bartholomew, investment strategist at Aberdeen Standard Investments.

“Employment growth remains a bright spot amid a fairly mixed bag of US data and yet markets have come to expect a cut now so will fall out of bed if they don’t get one.”

Andrew Hunter, senior US economist, at Capital Economics also thinks the central bank will lower interest rates, but not until September.

“Employment growth is still trending gradually lower but, with the stock market setting new records and trade talks back on (for now at least), the data support our view that Fed officials are more likely to wait until September before loosening policy,” he said.

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