In this morning’s data, the economy added 73,000 jobs in July, less than expected and the previous month was revised substantially lower to only 14,000 jobs added. The Private Education and Health Services industry was relatively strong, while the Manufacturing industry and Professional and Business Services industry were both relatively weak. The Unemployment Rate increased one tenth to 4.2% as expected and the Labor Force Participation Rate at 62.2% is one tenth less than the previous month. Average Hourly Earnings increased 0.3% in July, also as expected, and grew 3.9% on an annual basis. In addition, Average Weekly Hours were 34.3, which is one tenth higher than the previous month.
Job growth continued in July, but at a considerably lower amount than in previous months, especially when you incorporate the downward revision to the June period. The private sector increased but was less than the estimate, driven in part by weakness in the manufacturing industry. The unemployment rate increased slightly to 4.2%, still relatively low on a historical basis. The participation rate dropped slightly and the slight uptick in average weekly hours hints that current employees worked longer to help keep up with output.
Overall, a relatively weak report with jobs gains slowing down considerably over the past two months, although the unemployment rate remains relatively low. As uncertainty remains on tariff outcomes, both consumers and companies still appear cautious in their spending activities. The Federal Reserve is also hesitant to move rates as tariff policy evolves per their comments following their meeting earlier this week. The impact of the moderating labor market on consumers will be a key factor for the Fed and the economy in the weeks ahead.
In all, the yield on the 10-year US Treasury ticks lower following the report and equity futures are also lower as we head into the market open.
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