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An F-150 pickup was assembled at a Ford factory in Dearborn, Michigan last year. Manufacturing has been a weak point in recent months, with only 4,000 jobs in factories in the United States added in April and none in the previous month.
Bill Pugliano / Getty Images
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Bill Pugliano / Getty Images
An F-150 pickup was assembled at a Ford factory in Dearborn, Michigan last year. Manufacturing has been a weak point in recent months, with only 4,000 jobs in factories in the United States added in April and none in the previous month.
Bill Pugliano / Getty Images
Forecasters expect to see another robust number of jobs on Friday when the Labor Department will release its May job outlook. The details contained in the report may give some clues as to how the ongoing trade struggles of the Trump administration affect the job market.
Economists polled by Reuters expect the report to show that employers created about 185,000 jobs last month. This figure would be lower than the 263,000 jobs posted in April, but above the 3-month average of 169,000 jobs. The unemployment rate should remain stable at 3.6% – a level close to its lowest level in 50 years.
Manufacturing has been a weak point in recent months, with only 4,000 factory jobs created in April and none the month before. The index of manufacturing activity released Monday fell to its lowest level in two and a half years.
The manufacturing sector is particularly sensitive to trade disputes, which can increase costs, disrupt supply chains and depress foreign demand. Last month, the administration increased tariffs on imports from China worth $ 200 billion. The president also threatened to impose tariffs on imports from Mexico starting next week.
"It is becoming increasingly clear that the ongoing trade war in the region is starting to have tangible effects on the US economy," said Tim Quinlan, senior economist at Wells Fargo Securities. "We are not at the edge of the cliff here, but the pace of expansion in [manufacturing] is the slowest of the Trump era. "
The situation is different in the much larger service sector where fares seem to have less negative consequences. An index of service activity released Wednesday showed accelerated growth. More than three-quarters of the jobs created in April were in the service sector.
"The question is whether slowing growth in the goods-producing sector could depress the service sector," said Martha Gimbel, director of economic research at Indeed Hiring Lab. "Goods industries in general are more susceptible to trade wars, commodity prices and other unpredictable factors."
An escalation of the trade battle with Mexico could be particularly detrimental to the auto industry.
"I do not think it's possible to exaggerate how much the manufacturing process in North America is integrated," Quinlan said. "Quintessentially" made in American made vehicles are based on parts made in Mexico. The Ford F-150, for example, is manufactured in Mexico 15%. important for US commercial interests ".
This worries central bankers, eager to keep the economy growing in the face of growing trade tensions.
"We do not know how or when these problems will be solved," said Federal Reserve Chairman Jerome Powell this week. "We are watching closely the implications of these developments for the US economic outlook and, as always, we will act appropriately to support the expansion."
The Fed's interest rate setting committee is expected to meet in less than two weeks.
One of the things policymakers will watch for in Friday's jobs report is the labor force participation rate, which declined in March and April. Less than 63% of the eligible population is working or looking for work. Unless more marginalized people can be reintegrated into the labor market, it will be difficult to maintain a steady pace of recruitment.
Wages also rose gradually, but not as quickly as expected, given the unprecedented unemployment rate. For the year ending in April, wages increased on average by 3.2%.
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