U.S. job growth slowed more than expected in July, resulting in a rise in the unemployment rate, according to the July jobs report just released today (Friday) by the U.S. Department of Labor.
After surging (a revised) 298,000 in June, nonfarm payrolls increased by 209,000 last month. The unemployment rate ticked up to 6.2% from 6.1%.
Economists had expected payrolls to increase 233,000 in July and the unemployment rate to hold steady at 6.1%.
Still, July's gains mark the sixth consecutive month that employment expanded by more than 200,000, a stretch not seen since 1997.
"The report portrays a labor market that is doing ok but not great," Steven Pressman, professor of economics and finance at Monmouth University in Long Branch, N.J., told Money Morning. "There was some good news, some mixed news, and some bad news in the report. The fact that the labor market has done reasonably well over the past several months is itself a good sign. This may lead to greater confidence by business firms and consumers, which should spur economic growth and more hiring in the future. However, I continue to wait for the labor market to pick up a bit more before I am willing to declare victory over the consequences of the Great Recession."
Indeed, the report points to some slack still lingering in the labor market. It also gives the U.S. Federal Reserve some additional wiggle room to keep interest rates low for a while longer. "A range of labor-market indicators suggests that there remains significant underutilization of labor resources," the Federal Open Market Committee said in a statement on Wednesday.
And what has been missing from job gains since the economic recovery is better wages. The July jobs report revealed no improvement in that area.
Following are a dozen key takeaways from Friday's closely watched jobs report.
12 Key Highlights of the July Jobs Report
- The bulk of job gains in July came from the typically lower-paying services industries, which added 140,000. That was, however, sharply lower than the 232,000 jobs the sector added in the previous month.
- Manufacturing payrolls rose by 28,000 and construction jobs increased by 22,000.
- Federal, state, and local governments hiked headcount by 11,000.
- Job gains for May and June were revised up a collective 15,000. May's gains were revised to 229,000 from 224,000, and June's gains were revised to 298,000 from 288,000.
- The number of Americans out of work at least six months slipped by 74,000, yet still sits at an elevated 3.2 million. Long-term unemployment accounts for 33% of all the jobless.
- The number of people working part-time jobs because they couldn't find full-time work clocked in at 7.5 million in July, largely unchanged from June.
- The under-employment rate, which includes discouraged workers who have stopped looking for work, part-time employees who prefer full-time work, and the unemployed, eked up to 12.2% from 12.1%.
- The labor-force participation rate ticked up a tad in July, from 62.8% in June to a still unhealthy 62.9%. The rate remains near its lowest level since the late 1970s.
- For the fifth straight month, the average workweek remained unchanged at 34.5 hours. This is troubling because employers typically add hours before adding new staff.
- The manufacturing workweek dipped by 0.2 hour in July to 40.9 hours, and factory overtime dipped down by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.7 hours for the fifth consecutive month.
- The closely watched average hourly earnings rose a paltry $0.01 to $24.45. Pay increases have averaged 2% so far in the recovery, barely enough to keep up with inflation and weighing heavily on consumer spending. Economists were expecting wages to increase 0.2% over last month and 2.2% over last year. "Worker productivity has been increasing, but workers are not seeing the gains from their efforts in their paychecks," Pressman shared.
- The one-tenth of a percentage point increase in the unemployment rate to 6.2% was due to 329,000 Americans, including many who had given up job searches, entering (or re-entering) the job market. While an encouraging sign, it also makes it all the more difficult for job seekers (especially the long-term unemployed) to land a position.
Pressman said the small increase in the unemployment rate isn't a big concern, especially when it comes from more people looking for work rather than from layoffs. But, the increase also reflects something else: the struggle of achieving the American dream.
"People don't want jobs because they like working," Pressman said. "They want jobs because they need income."
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- New York Times: Job Market Shows New Gains, but Pace Eases
- Associated Press: U.S. Job Growth Eases but Tops 200K for a 6th Month