The pace of job growth in the United States is showing signs of slowing despite a solid reading in July.
The U.S. economy added 187,000 non-farm jobs in July, slightly below consensus estimates of 200,000 but above June’s downwardly revised figure of 185,000, the U.S. Bureau of Labor Statistics (BLS) reported Friday.
Although employers continue to show resilience against economic headwinds, job growth is down significantly considering there were 528,000 jobs added in July 2022. On the other hand, the unemployment rate and the number of unemployed persons changed little last month, coming in at 3.5% and 5.8 million, respectively, per BLS’ report.
The unemployment rate in the United States has ranged between 3.4% to 3.7% since March 2022. In January, the unemployment rate hit 3.4%, marking the lowest level since 1969, according to The Washington Post.
The labor market appears to still be humming in spite of the country’s current place in the business cycle, said Satyam Panday, U.S. chief economist at S&P Global Ratings.
“A 3.5% unemployment rate, you can’t complain about that. It’s a nice glide path down,” said Panday, per CNBC. “We would have liked to see wage growth come down a little, but the purchasing power of the consumer seems to be holding up well.”
A survey of households showed that average hourly earnings have risen 4.4% over the last 12 months, placing year-over-year wage growth above the current 3% inflation rate. In addition, the labor force participation rate held firm at 62.6% for the fifth consecutive month, according to BLS’ report.
The sectors that experienced the most growth during the month were health care (+63,000), social assistance (+24,000), financial activities (+19,000), and wholesale trade (+18,000). Employment in other sectors also saw decent growth for the month, including the services industry (+20,000), construction (+19,000), and leisure and hospitality (+17,000).
Monthly employment declines were seen in professional and business services (-8,000), temporary help services (-22,000), and commercial banking (-3,000).
“Job growth recently has been driven by non-cyclical sectors, like health care, education and government. These sectors had lagged in the original recovery but have accounted for more than 50% of job creation in 2023 as opposed to 25% in 2022,” said Sonu Varghese, global macro strategist at Carson, an investment advisory firm based in Nebraska, Yahoo Finance reported.
“The cyclical sectors have been on the softer side this year, and this report points to more of the same. The unemployment rate fell a tick to 3.5% indicating that the labor market remains strong. Strong employment and strong wage growth means income growth is still strong, which is positive for consumption and the economy, as long as inflationary pressure remains muted,” Varghese claimed.
