In this morning’s data, the economy added 114,000 jobs in July, less than expected and the previous month was revised lower. The Health Care and Social Assistance industry was relatively strong, while the Information Services industry was relatively weak. The Unemployment Rate increased two tenths to 4.3% and the Labor Force Participation Rate at 62.7% is one tenth higher than the previous month. Average Hourly Earnings increased 0.2% in July, slightly lower than expected, and grew 3.6% on an annual basis. In addition, Average Weekly Hours were 34.2, which is one tenth less than the previous month.
Overall, a smaller increase than expected in headline payrolls in July, coupled with an increase in the unemployment rate. The labor market has softened from levels seen earlier in the year. In addition, average hourly earnings were slightly less than expected in July and annual wage increases have moved below the 50-year average. The Federal Reserve chose to keep rates at current levels earlier this week, expecting to review the totality of the data at upcoming meetings to determine when decreases in interest rates may be warranted. With a softer labor market and less upward pressure on wages, the data points this morning show progress toward a slowing economy, giving the Fed more to consider in the coming weeks as they adjust their policy.
Following the release of the jobs report, the yield on the U.S. 10-year treasury moves markedly lower and equity futures are also lower as we head into the market open.
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