Hiring roughly held steady in July as employers added 187,000 jobs despite high interest rates and inflation.
The unemployment rate fell from 3.6% to 3.5%, the Labor Department said Friday.
Economists surveyed by Bloomberg had estimated that 200,000 jobs were added last month.
Payroll gains for May and June were revised down by a total of 49,000, portraying a somewhat softer spring labor market than believed. The June rise in employment was downgraded to 185,000 from 209,000.
What is the wage growth rate?
Average hourly earnings rose 14 cents to $33.74, keeping the yearly increase at 4.4%. Although pay increases have slowed from more than 5% last year, they’re still too high for a Federal Reserve seeking to push them down to 3.5% or lower to align with its 2% overall inflation target.
Is the job market growing?
Job growth has downshifted this year but not nearly as sharply as economists projected, with average monthly job gains topping 250,000. Experts credit lingering pandemic-related labor shortages that have made employers reluctant to lay off workers even as they’ve pulled back hiring amid the Federal Reserve’s aggressive interest rate hikes and softer consumer demand.
Many forecasters, in turn, now believe the U.S. may dodge a recession that seemed all but certain several months ago.
Morgan Stanley expected job gains to continue to moderate in July now that Americans’ post-COVID pent-up demand for travel and other services largely has run its course. Average monthly payroll gains in leisure and hospitality, which includes restaurants and hotels, slowed to 19,000 in the second quarter from 67,000 early in the year, the research firm noted.
During the first half of the year, state and local government hiring bolstered employment, making up nearly a quarter of all payroll gains. But Morgan reckoned that trend likely lost some steam last month, in part because of summer school closings.
Yet public education payrolls are still below their pre-COVID level and so a smaller than normal contingent of teachers and other staff may have left jobs in July, supporting solid employment growth, says economist Nancy Vanden Houten of Oxford Economics.
Others said persistent worker shortages could have juiced summer hiring. In tight labor markets, employers are eager to scoop up the student summer workforce, says Goldman Sachs economist Spencer Hill.
