July Posts Record Employment but Slower Than Expected Jobs Growth
Timothy Doescher / David Kreutzer /
The Bureau of Labor Statistics’ July employment report fell short of expert predictions, reporting a gain of only 157,000 new jobs, while at the same time reporting a drop in the unemployment rate to 3.9 percent from 4.1 percent last month.
While the job gains in July were lower than anticipated, the numbers from May were revised up from +244,000 to +268,000 jobs, and the change for June was revised up from +213,000 to +248,000 jobs. This represents combined gains of 59,000 more than previously reported.
One of the main reasons the jobs number is lower than anticipated is that government employment shrunk by 13,000 jobs, while the private sector added 170,000 jobs.
As noted, monthly reports are provisional and subject to revision. When added to previous reports, the July picture shows strong improvement in employment, with 1.5 million new jobs so far this year.
This longer view of employment squares with recent and projected income growth. According to the Bureau of Economic Analysis, second-quarter gross domestic product growth was over 4 percent, and many analysts are predicting that GDP growth for the whole year would be at least 3 percent—something that has not happened in over a decade.
The falling unemployment rate often indicates a decrease in the labor force participation rate. However, July’s labor force participation rate held steady at 62.9 percent. In fact, 105,000 people entered the labor force, showing slight gains of almost 200,000 from a year ago, and a record 155,965,000 people employed in July.
The major subcategories continue to see near record low jobless rate, including adult men (3.4 percent), adult woman (3.7 percent), teenagers (13.1 percent), African-Americans (6.6 percent), Asians (3.1 percent), and a record low for Hispanics (4.5 percent).
Notable gains and losses in the report come from professional and business services (+51,000 jobs), manufacturing (+37,000 jobs), health care (+34,000 jobs), food service and drinking (+26,000 jobs), construction (+19,000), and a slight loss in mining numbers (-4,000 jobs). This is a sector President Donald Trump has focused on since his election in 2016.
In terms of pay, we continue to see a slow and steady rise in average hourly earnings, rising 7 cents to $27.05. Over the last year, earnings have increased by 71 cents, or 2.7 percent.
Maintaining economic growth, with more jobs and higher pay, requires good policy. To keep the momentum going, Congress needs to make the recent tax cuts permanent and the administration needs to continue rolling back harmful regulations.
The president also needs to move trade policy away from retaliatory tariffs and toward action that will make good on his call for zero tariffs and zero trade restrictions.