Unemployment holds steady, but job growth disappoints in July

The U.S. econ­o­my added 187,000 jobs in July, falling short of expec­ta­tions and sig­nal­ing a poten­tial slow­down in the nation’s eco­nom­ic growth. The Labor Depart­men­t’s report on Fri­day revealed that non­farm pay­rolls expand­ed by 187,000, slight­ly below the Dow Jones esti­mate of 200,000 jobs. 

How­ev­er, this fig­ure was a mod­est improve­ment from the down­ward­ly revised 185,000 jobs added in June.

Despite the slight miss in job gains, the unem­ploy­ment rate stood at a promis­ing 3.5%, just above its low­est lev­el since late 1969, against a con­sen­sus esti­mate of 3.6%. In addi­tion, aver­age hourly earn­ings rose by 0.4% for the month, trans­lat­ing to an annu­al pace of 4.4%, both exceed­ing the respec­tive esti­mates of 0.3% and 4.2%. These num­bers indi­cate that the labor mar­ket remains rel­a­tive­ly strong, although there are some con­cerns about the per­sis­tent­ly high wage growth.

While the labor force par­tic­i­pa­tion rate held steady at 62.6% for the fifth con­sec­u­tive month, the rate for those in the 25-to-64 age group declined slight­ly to 83.4%. More­over, a more encom­pass­ing unem­ploy­ment rate, includ­ing dis­cour­aged work­ers and those with part-time jobs for eco­nom­ic rea­sons, fell to 6.7%, indi­cat­ing some progress.

Health­care led job cre­ation in the indus­try, with 63,000 jobs added, while leisure and hos­pi­tal­i­ty, a lead­ing sec­tor dur­ing the pan­dem­ic recov­ery, added only 17,000 jobs, sig­nal­ing a slow­down in that sector.

Despite the endur­ing econ­o­my, con­cerns per­sist due to the 11 Fed­er­al Reserve inter­est rate hikes aimed at curb­ing infla­tion. Experts remain divid­ed on whether a reces­sion is immi­nent, with some pre­dict­ing a down­turn and oth­ers express­ing opti­mism about the nation’s abil­i­ty to with­stand var­i­ous challenges.

“This is a real­ly, real­ly sol­id labor mar­ket,” said Jonathan Sokoe, senior vice pres­i­dent at job place­ment firm Adec­co. Going for­ward, com­pa­nies like­ly will focus on ‘reten­tion of qual­i­ty employ­ees, upscal­ing and rescal­ing,” he added.

Mar­ket reac­tions to the jobs report have been rel­a­tive­ly mut­ed, with no sig­nif­i­cant impact on expec­ta­tions regard­ing the Fed­er­al Reserve’s next pol­i­cy move. While some observers believe the Fed might con­sid­er anoth­er rate hike, the pre­vail­ing sen­ti­ment sug­gests that the cen­tral bank may hold rates steady at its upcom­ing meet­ing in September.