Jobs report misses as unemployment rate slides near 18-year low

  • The July jobs report indicated that US employers added 157,000 jobs on net last month, fewer than economists expected.
  • But the unemployment rate fell to 3.9%, closer to an 18-year low.
  • Employers in the manufacturing sector extended a strong streak of job gains, suggesting that trade disputes hadn’t yet weighed on hiring decisions in a major way.

US employers added 157,000 jobs last month, fewer than expected, according to a Bureau of Labor Statistics report released Friday.

Economists had expected the jobs report to show nonfarm payrolls increasing by 193,000 on net. The job gains in June were revised higher.

The unemployment rate fell to 3.9% from 4% as expected, moving closer to an 18-year low. It ticked up to 6.6% from 6.5% for African-Americans after hitting a record low in May but fell to 3.4% for whites, its lowest since 2000.

Wage growth increased but remained sluggish. Average hourly earnings rose by 0.3% in July month-on-month, a gain of 0.1 percentage points in line with economists’ estimates. Year-on-year growth was unchanged at 2.7%.

“The important point is that there is no sign of overheating but that aggregate wages and salaries (jobs x hours x earnings) are growing at a brisk pace,” Neil Dutta, the head of US economics at Renaissance Macro, said in a note.

The construction sector added 19,000 jobs, despite a slowdown in residential investmentthat has raised red flags about the broader economy.

Manufacturing gained 37,000 jobs, driven by durable-goods and transportation companies. This suggests that the trade disputes between the US and China are not yet slowing down hiring in manufacturing. Over the past year, manufacturers have hired 327,000 people, the most since the 12 months through April 1995.

But a big drag came from sporting goods, hobby, book, and music retailers, which lost 31,800 jobs on net.

One important factor driving economists’ forecast for a strong jobs month overall was the low number of people filing for unemployment benefits for the first time. Initial jobless claims were near a 50-year low in the week the BLS conducted its survey for the jobs report and haven’t added up to more than 300,000 since March 2015. Jobless claims are an early sign of mass layoffs in the labor market, since many people apply for benefits soon after they’re let go.

See also: