In this morning’s data, the economy lost -23,000 jobs in July, less than the increase that was expected. Reviewing the individual categories, the Health Care and Social Assistance industry was relatively strong, while the Leisure and Hospitality industry and Government jobs were relatively weak. The Unemployment Rate moved one tenth lower to 4.1%. Average Hourly Earnings increased 0.1% in July, less than expected, and grew 3.2% on an annual basis, two tenths less than the previous month’s revised figure. The Labor Force Participation Rate was 61.4%, less than expected and one tenth less than the previous month. Average Weekly Hours were 34.3, the same as the previous month.
Overall, an underwhelming jobs report in July with a decrease in headline jobs and a tick lower for the unemployment rate. Job strength in the healthcare industry continues but was offset somewhat by weakness in hospitality and government jobs. Wages increased just slightly in the month, and wage increases appear to just be keeping up with inflation, not giving consumers additional purchasing power. The participation rate ticks slightly lower, and there was no change to average weekly hours.
The labor market appears weaker than in previous months. Tight immigration policy, continued hesitancy of companies to hire or let people go, and the growth of jobs related to the Gig Economy are all likely factors in the changing labor market. Lower oil prices and moderating inflation would be welcomed should further progress be made in the Iran conflict, especially as consumers may have waning purchasing power given wage dynamics and as the benefits from tax relief earlier this year begin to abate. How consumers hold up amidst these crosscurrents and will be key for the economy and markets in the weeks ahead.
In all, the yield on the 10-year US Treasury is lower this morning, and equity futures are higher as we head into the market open.
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