The U.S. labor market finally hit the brakes in July, only adding 73,000 jobs. This figure was not even close to the 100,000 jobs that Dow Jones had predicted would be created. The unemployment rate ticked up to 4.2%, further proof that all is not well in the economy. Consider this report the advance warning of a cooling trend in hiring momentum. According to many experts, the labor market is not in crisis.
The apparent July total for job growth is a shocking juxtaposition against the drastically revised downward numbers from earlier months. June job growth took a beating, with numbers revised downward to a meager 14,000. At the same time, the net revision for May and June was a jaw-dropping downward adjustment of 258,000 jobs. This negative revision underscores the continuing precariousness in the world of work.
In his big July report, the health care sector continued to be the rockstar, adding 55,000 new jobs. Social assistance had a powerful effect, adding another 18,000 jobs. The federal government experienced a drop, cutting 12,000 jobs in the month. From a height back in January, federal employment is down 84,000 jobs.
The labor force participation rate ticked down to 62.2% in July, its lowest level since November 2022. This rapid decline might be a combination of external economic factors and the difficulty workers have in jumping back into the labor force.
Even with the slower pace of job growth, average hourly earnings did record a gain, up 0.3% in July. Median hourly earnings have risen by 4.4% annually. As implied by this growth, it means that people with jobs are benefiting from the wage increases even as the labor market undergoes one of its biggest upheavals.
Ger Doyle, North America regional president at Manpower Group, noted that the report indicates positive signs for the job market.
“Today’s report adds weight to signs of a slow but persistent cooling trend. While the labor market is not in crisis, hiring momentum continues to soften, and pressures are beginning to build.”