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Solid July Jobs Report Points to Momentum in Q3

05 August, 2018, 20:11 | Author: Melinda Barton
  • U.S. economy adds 157,000 jobs in July slightly below expectations

Martha Gimbel, director of economic research at Indeed.com, noted before Friday's report that "in the first half of 2018, the average monthly increase in jobs had even exceeded those in the comparable periods of 2015 and 2016". The unemployment rate fell from 4 percent to 3.9 percent.

"Non-farm payrolls increased by a more modest 157,000 in July but, with the gain in the preceding two months revised up by a cumulative 60,000, the labor market still appears to be in good health", said Paul Ashworth, chief US economist at Capital Economics.

Job gains were seen in the durable goods manufacturing and health care sectors as well as in restaurants and bars.

"Congress and the administration have taken important steps in recent weeks to tackle this challenge, but this jobs report is a reminder that more work needs to be done through partnerships with the private sector to solve the workforce crisis", she said. In June, there was a surge in the number of people re-entering the labor force, while the number of those who gave up on their job searches fell. The consensus on Wall Street calls for the central bank to raise rates twice more this year, in September and December.

And the underemployment rate - which includes discouraged workers no longer searching for work, as well as involuntary part-time workers - dropped to 7.5 per cent, the lowest in 17 years, from 7.8 per cent. Hospitals added 6,800 jobs in July, 36% fewer than the 10,600 new jobs added in June, a month that represented a massive hiring spike from sluggish May growth. Typically, when unemployment has fallen below 4 per cent in the past, wages have increased at a faster pace.


Friday's report also included a revision to prior jobs reports, which now suggests the economy added 248,000 jobs in June, up from an initial report showing 213,000 new jobs were added to the economy. The annual increase in wages was unchanged at 2.7 percent in July.

Strong demand from consumers and businesses sharply reduced the stockpiles of goods held on many store shelves and warehouses.

Thirty-seven percent of responding small business owners said they had job openings they could not fill, the highest number since the Monthly Jobs Report began, the NFIB said August 2.

Meanwhile, average hourly earnings increased slightly, as the tightening labor market continues to put only modest upward pressure on employee earnings. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June.

"The vast majority of the jobs we're adding are in services, which tend to be low-wage sectors", said Megan Greene, chief economist at Manulife Asset Management.

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