The report from the Labor Department on Friday revealed that the job growth in July fell short of expectations, indicating a deceleration in the growth of the U.S. economy. During that month, nonfarm payrolls expanded by 187,000, slightly below the anticipated estimate of 200,000 by Dow Jones. Although this figure was slightly lower than projected, it still represented a modest increase from the revised count of 185,000 jobs added in June.
Furthermore, the unemployment rate in July stood at 3.5%, deviating from the consensus estimate that the jobless level would remain steady at 3.6%. It is pertinent to note that the current unemployment rate is just above the lowest level since late 1969.
Additionally, average hourly earnings, a crucial indicator in the fight against inflation by the Federal Reserve, rose by 0.4% in July, which translates to an annual growth rate of 4.4%. Both of these figures exceeded their respective estimates of 0.3% and 4.2%.
In terms of labor force statistics, the labor force participation rate for July remained steady at 62.6% for the fifth consecutive month. However, the rate for individuals within the "prime" age group of 25 to 64 years old slightly decreased to 83.4%.
Considering a more comprehensive measure, which factors in discouraged workers and those holding part-time jobs for economic reasons, the unemployment rate fell to 6.7% in July, a decrease of 0.2 percentage points from June. The household survey, utilized to calculate the unemployment rate, revealed a more substantial increase of 268,000.
Following the release of these findings, stock markets experienced a rally, with the Dow Jones Industrial Average recording an increase of 200 points in early trading. Concurrently, Treasury yields observed a significant decline.
Breaking down the unemployment rates among various demographic groups, the rate for the Black community decreased to 5.8% in July, while the rate for adult women slightly increased to 2.7%. Moreover, the rate for Asians dropped to 2.3%, a noteworthy decline of 0.9 percentage points, closely approaching its all-time low since January 2000.
Amongst the different sectors contributing to job creation, the healthcare industry led the way with an addition of 63,000 jobs in July. Other sectors also made significant contributions, including social assistance with 24,000 jobs, financial activities with 19,000 jobs, wholesale trade with 18,000 jobs, and the other services category with 20,000 jobs, which encompassed 11,000 from personal and laundry services.
It is worth mentioning that the leisure and hospitality sector, which had been one of the leading industries throughout the recovery from the Covid pandemic, added only 17,000 jobs in July. This downward trend aligns with the sector's recent slowing growth rate, following average monthly gains of 67,000 jobs in the first three months of 2023.
Moreover, the revised totals for the previous months showed a decrease in job gains. The count for June was revised downward to 185,000, experiencing a downward revision of 24,000, while the count for May was adjusted to 281,000, down 25,000 from the initial estimate.
Despite the deceleration in job gains, the economy has proven to be resilient in the face of various challenges, notably a series of eleven interest rate hikes by the Federal Reserve.