US adds 136,000 jobs; unemployment hits 50-year low of 3.5%

US hiring has averaged 157,000 in the past three months, enough to absorb new job seekers and lower unemployment over time. (AFP)
Updated 04 October 2019

US adds 136,000 jobs; unemployment hits 50-year low of 3.5%

  • Hiring has slowed this year as the US-China trade war has intensified
  • With the US economic expansion in its 11th year and unemployment low, many businesses have struggled to find the workers they need

WASHINGTON: US employers added a modest 136,000 jobs in September, enough to help lower the unemployment rate to a new five-decade low of 3.5 percent.
Hiring has slowed this year as the US-China trade war has intensified, global growth has slowed and businesses have cut back on their investment spending. Even so, hiring has averaged 157,000 in the past three months, enough to absorb new job seekers and lower unemployment over time.
Despite the ultra-low unemployment rate, which dropped from 3.7 percent in August, average hourly wages slipped by a penny, the Labor Department said Friday in its monthly jobs report. Hourly pay rose just 2.9 percent from a year earlier, below the 3.4 percent year-over-year gain at the beginning of the year.
The unemployment rate for Latinos fell to 3.9 percent, the lowest on records dating from 1973.
With the US economic expansion in its 11th year and unemployment low, many businesses have struggled to find the workers they need. That is likely one reason why hiring has slowed since last year.
But it’s likely not the only reason. The jobs figures carry more weight than usual because worries about the health of the US economy are mounting. Manufacturers have essentially fallen into recession as US businesses have cut spending on industrial machinery, computers and other factory goods. And overseas demand for US exports has fallen sharply as President Donald Trump’s trade conflicts with China and Europe have triggered retaliatory tariffs.
A measure of factory activity fell in September to its lowest level in more than a decade. And new orders for manufactured items slipped last month, the government reported.
Persistent uncertainties about the economy in the face of Trump’s trade conflicts and a global economic slump are also affecting hotels, restaurants and other service industries. A trade group’s measure of growth in the economy’s vast services sector slowed sharply in September to its lowest point in three years, suggesting that the trade conflicts and rising uncertainty are weakening the bulk of the economy.
The job market is the economy’s main bulwark. As long as hiring is solid enough to keep the unemployment rate from rising, most Americans will likely remain confident enough to spend, offsetting other drags and propelling the economy forward.
But a slump in hiring or a rise in the unemployment rate in coming months could discourage consumers from spending as freely as they otherwise might during the holiday shopping season.
Consumers are still mostly optimistic, and their spending has kept the economy afloat this year. But they may be growing more cautious. Consumer confidence dropped sharply in September, according to the Conference Board, a business research group, although it remains at a high level.
Americans also reined in their spending in August after several months of healthy gains. The 0.1 percent increase in consumer spending that month was the weakest in six months.
Other parts of the US economy are still holding up well. Home sales, for example, have rebounded as mortgage rates have fallen, helped in part by the Federal Reserve’s two interest rate cuts this year. Sales of existing homes reached their highest level in nearly 18 months in August. And new home sales soared.
Americans are also buying cars at a still-healthy pace. Consumers would typically be reluctant to make such major purchases if they were fearful of a downturn.


Beijing tariff demands may expand US-China ‘phase one’ trade deal significantly

Updated 20 November 2019

Beijing tariff demands may expand US-China ‘phase one’ trade deal significantly

  • Beijing wants Trump to eliminate the 15 percent tariffs on about $125 billion worth of Chinese goods imposed on Sept. 1

WASHINGTON: A “phase one” trade deal between the United States and China was supposed to be a limited agreement that would allow leaders from both countries to claim an easy victory while soothing financial markets.
But it may morph into something bigger if US President Donald Trump agrees to Beijing’s demands to roll back existing tariffs on Chinese goods, people familiar with the talks say.
China’s commerce ministry said this month that removing tariffs imposed during the trade war is an important condition to any deal. The demand has US officials wondering if higher Chinese purchases of US farm goods, promises of improved access to China’s financial services industry, and pledges to protect intellectual property are enough to ask in return.
Two people briefed on the talks said Trump has decided that rolling back existing tariffs, in addition to canceling a scheduled Dec. 15 imposition of tariffs on some $156 billion in Chinese consumer goods, requires deeper concessions from China.
“The president wants the option of having a bigger deal with China. Bigger than just the little deal” announced in October, said Derek Scissors, a China scholar with the American Enterprise Institute in Washington.
Scissors, who consults with administration officials, said whether Trump will agree to remove existing tariffs depends largely on whether he believes it will benefit his re-election chances. Some White House advisers would like to see China agree to large, specific agricultural purchases, while the US maintains existing tariffs for future leverage.
That would help Trump’s farm belt constituency while allowing the president to campaign on maintaining his “tough on China” stance, which holds appeal to voters in key states like Ohio, Michigan and Pennsylvania.
But Beijing is balking at committing to a specific amount of farm product purchases, within a particular time frame, and wants to let supply and demand dictate deals instead.
Beijing also wants Trump to eliminate the 15 percent tariffs on about $125 billion worth of Chinese goods imposed on Sept. 1, as well as provide some relief from the 25 percent tariffs imposed on an earlier, $250 billion list of industrial and consumer goods.
One Washington-based trade expert said that to achieve the $40-50 billion in annual Chinese purchases of American farm goods touted by Trump in October, he would likely have to eliminate all of the tariffs the US put in place since the trade war started in 2018.
Trump and US Trade Representative Robert Lighthizer recognize that making such concessions for a “skinny” trade deal that fails to address core intellectual property and technology transfer issues is not a very good deal for Trump, a second person briefed on last weekend’s trade phone call said.
Trump is the final decision-maker in the US on any deal, and hasn’t committed to any specifics so far, White House advisers say.
The president said Tuesday that China “is going to have to make a deal that I like. If they don’t, that’s it.”
A ‘phase one’ trade deal, once expected to be completed within weeks of an October news conference between Trump and Chinese vice premier Liu He, could now be pushed into next year, trade experts say.