US adds 157,000 jobs in July as unemployment falls to 3.9 percent
Friday, August 03, 2018
Nonfarm payroll jobs rose 157,000 in July compared with 213,000 in June, as the unemployment rate fell to 3.9 percent from 4.0 percent, the Bureau of Labor Statistics reported. Employment rose in healthcare, manufacturing, professional and business services, and social assistance.
Unemployment for some major worker groups decreased in July compared with June: adult men (3.4 percent from 3.7 percent) and whites (3.4 percent from 3.5 percent). “The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), Blacks (6.6 percent), Asians (3.1 percent), and Hispanics (4.5 percent) showed little or no change over the month,” the BLS reported.
The Federal Reserve Bank acknowledged the continuing strength of the labor market in an Aug. 1 statement. The Fed aims to increase interest rates twice in 2018.
Meanwhile, workers’ pay is flat. Standard economic theory holds that a falling jobless rate motivates employers to raise workers’ pay, as the pool of job-seekers declines. Empirical data, though, shows otherwise.
"In July, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $27.05," the BLS reported. "Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 3 cents to $22.65 in July."
"This continued slow wage growth is an obvious sign that the economy is not at full employment," according to Valerie Wilson and Jessica Schieder, economists at the Economic Policy Institute in Washington D.C.
In June, with a 4.0 percent jobless rate, the trend of flat worker pay hikes saw average hourly earnings for all employees on private nonfarm payrolls nudge up by 5 cents to $26.98 versus an increase of 8 cents to $26.92 in May.
In the meantime, the employment-to-population ratio (the share of the labor force now employed versus the total working-age population) was 60.5 percent in July versus 60.4 percent in June, and has risen by 0.3 percentage point over the year.
The nation’s smallest enterprises went on a hiring spree. Small firms of 1-49 employees hired 52,000 workers in July versus 29,000 in June, according to the ADP National Employment Report. Within this small business sector, enterprises of 1-19 employees added 21,000 new hires. Firms of 20-49 expanded their payrolls by 31,000.
Companies of 50-499 workers hired 119,000 in July compared with 80,000 new employees in June. Firms with 500 or more employees hired 48,000 in July versus 69,000 new hires in June.
According to ADP’s report, the service sector of the economy expanded by 177,000 jobs in July versus 148,000 new hires in June. Health care/social assistance led the way with 49,000 jobs added in July. Education/health was next with 48,000 new hires and professional/business services with 47,000.
Payrolls of the goods-producing sector grew 42,000 in July compared with 29,000 in June. Manufacturing firms hired 23,000 workers in July versus 12,000 in June. Construction employment rose by 17,000 in July from 13,000 new hires in June.
ADP’s National Employment Report delivers a monthly snapshot of America’s nonfarm private sector employment from actual transactional payroll data, according to the ADP Research Institute, which collaborates with Moody’s Analytics. ADP report’s differs from the BLS methodology that surveys businesses and households.
"The labor market is on a roll with no signs of a slowdown in sight," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. "Nearly every industry posted strong gains and small business hiring picked up."
Mark Zandi, chief economist of Moody's Analytics, said, "The job market is booming, impacted by the deficit-financed tax cuts and increases in government spending. Tariffs have yet to materially impact jobs, but the multinational companies shed jobs last month, signaling the threat."
It is unclear how and when the current trade war between U.S. and Canada, China and the European Union will end. Trade tariffs have uneven impacts on businesses and consumers, altering prices and product lines throughout the global and national marketplace.
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