Employment Summary for July 2019
The July Employment Situation showed a nonfarm payroll increase of 164,000, which comes off the heels of a stronger increase of 224,000 roles from the month prior. This number nearly matched projections by various media outlets and was “in line with average employment growth in the first 6 months of the year,” according to the report.
Notably, the 164,000 payroll increase almost met the estimated 165,000 increase by the Dow Jones forecast, according to CNBC. Meanwhile, the number was somewhat lower than MarketWatch’s forecast of 171,000. However, the figure was lower than 2018 job increases, which saw employment gains at an average of 223,000 per month.
According to Bloomberg, the addition of jobs for the month illustrated a “healthy pace,” while wages saw an increase. “U.S. employers kept adding workers at a healthy pace in July and wage gains picked up, underlining a solid labor market ahead of this week's Federal Reserve interest-rate cut and President Donald Trump's threat to ratchet up tariffs on Chinese goods,” noted the news service.
However, MarketWatch painted a less optimistic picture of wage gains based on this month’s jobs report. “The lowest unemployment rate since the late 1960s, however, is not generating the kind of wage increases workers used to receive when the labor market was so tight,” according to the publication. “Wage gains appeared to have topped out at just slightly above 3% a year,” which continued that “wages typically rose as much as 4% a year when unemployment was extremely low.”
Interestingly, the amount of income earned by the average worker saw a boost of “8 cents to $27.98 an hour in July,” per MarketWatch. "The increase in pay in the past 12 months edged up to 3.2% from 3.1%, but it’s still below a post 2008 recession peak of 3.4%.”
Overall, the jobless rate stayed the same at 3.7%, which marked a half-century low, according to the U.S. Bureau of Labor Statistics, meaning the number of unemployed individuals remained unchanged at approximately 6.1 million individuals. However, according to CNBC, economists forecast the jobless rate to shrink further to 3.6%.
“Economists had expected the unemployment rate to drop to 3.6%, which would have tied a 50-year low,” according to the publication, “but an influx of 370,000 new workers to the labor force brought the participation rate up to 63%, its highest since March.”
The publication also noted that the total labor force of 163.4 million U.S. workers is a “new record.”
Looking at a breakdown of the industries that saw the highest amount of job growth in July saw notable gains in professional and technical services, according to the BLS. Both industries saw a boost of 31,000 jobs. This increase brought “the 12-month job gain to 300,000” in the industry, according to the BLS data.
Meanwhile, healthcare saw a 30,000 increase and social assistance rose by 20,000. For the year, there have been over 405,000 new jobs in the industry. Finally, financial activities saw an increase of 18,000 jobs with most positions being in insurance roles. Interestingly, despite continued U.S. and China trade tensions, the manufacturing industry saw an increase of 20,000, although there have been fears that there would be a slowdown in the coming days.
But not all industries saw boosts in July. As the news service noted, mining saw a 5,000 drop. Additionally, employment fell yet again for retailers as well as jobs in media and information services, according to the BLS report.
The jobs report, meanwhile, comes at an important time for the future of the U.S. economy, according to CNBC. “The report comes amid worries that the U.S. economy could slide into recession in 2020, owing to a weaker global outlook and worries over the escalating trade war with China,” according to the news service. “Federal Reserve officials voted Wednesday to cut their benchmark interest rate a quarter percentage point, citing the global slowdown as well as concerns over weak inflation.”
“This is a report that is status quo for the Fed,” Subadra Rajappa, head of U.S. rates strategy at Societe Generale told Bloomberg in an interview. “I think the focus is going to be on all the other events and the rhetoric around tariffs going forward.”