WRAPUP 1-US job growth seen strong in June, wages picking up

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The broader USA economy appears sturdy.

Department of Labor Secretary Alex Acosta said, "It rose because more people are choosing to re-enter the labor force, to come back".

Jim O'Sullivan, chief USA economist at High Frequency Economics, said gains have averaged 215,000 month so far this year, up from 182,000 "more than strong enough to keep the unemployment rate trending down over time".

Acosta said, "We have more than half a million Americans saying "we want to work", and that is great news". "Similarly, it should ease the concerns of the hawks (at the Fed) who worry that the Fed's rate hike campaign is behind the curve".

The report showed that Canada's trade surplus with the USA narrowed to $3.3 billion in May, from $3.7 billion April, as more imports headed north across the border and south-bound exports decreased. USA tariffs on $34 billion worth of Chinese goods are due to come into effect on Friday.

President Donald Trump has imposed tariffs on a range of imported goods, including steel and aluminum, to protect domestic industries from what he says is unfair competition from foreign manufacturers.

June's Employment Situation report from the Bureau of Labor Statistics (BLS) records a pickup in total jobs of +213,000 in the latest month.

"Let's remember that for some time, the unemployment rate has been below the level typically associated with 'full employment, ' but the relatively robust level of hiring being seen suggests there's more room" for the jobless rate to drop, he added. It had declined for three straight months. "Over the year, average hourly earnings have increased by 72 cents, or 2.7 percent", BLS said on Friday. According to Bank of America Merrill Lynch, average hourly earnings growth of more than 0.4% from last month and payrolls of less than 140,000 would "spook" investors.

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On the same day that the Trump administration began imposing tariffs on $34 billion in Chinese imports and Beijing hit back with tariffs on the same amount of US goods, the job gain showed that the 9-year old USA economic expansion - the second-longest on record - remains on firm footing.

Wage growth continues to be sluggish: Not all the June data were encouraging. This means that workers' wages will likely fall behind the rate of inflation, which in May reached 2.8 percent. Economists expect inflation will hover around its target because of labor market tightness.

"There's definitely still a lot of room for the labour market to absorb the slack", Kevin Hassett, chairman of the White House Council of Economic Advisers, said on Bloomberg Television. "However, the ongoing trade war with China and our allies could hurt investment spending and hold back job and wage gains".

The dollar extended losses against the euro and the yen after the employment report.

US economist at UniCredit Research in NY. Stocks on Wall Street were trading higher.

At the same time, the unemployment rate rose to 4 per cent from 3.8 per cent, the government said Friday, as more people began looking for a job and not all of them found one.

Minutes of the Fed's June 12-13 policy meeting published on Thursday offered an upbeat assessment of the labor market.

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