American job growth falls short of expectations in July

Fredrick Soto
August 5, 2018

"This is an issue not just for the US, but in every other developed market".

Friday's report from the Labor Department shows the jobless rate fell one-tenth of a percent to 3.9 percent, one of the lowest figures in years. This puts the average for the last 12 months at 200,000, higher than the 185,000 in the previous 12 months, a rare.

"With inflation running at a roughly two percent rate, that means that there's not a lot of financial wiggle room for many Americans", said Mark Hamrick, Bankrate.com's senior economic analyst.

"The important point is that there is no sign of overheating but that aggregate wages and salaries (jobs x hours x earnings) are growing at a brisk pace", Neil Dutta, the head of USA economics at Renaissance Macro, said in a note.

On the bright side, the hiring spree has continued as the economy marches along. Last week, the commerce department reported that GDP had grown at an annual rate of 4.1% in the second quarter, the fastest pace in almost four years.

In a statement on Wednesday, the Federal Reserve described a healthy picture of the U.S. economy.

The unemployment rate nosed down 0.1 percentage points from June, to 3.9 percent, the BLS said in its latest report issued August 3. "Household spending and business fixed investment have grown strongly". Economists had expected a gain of about 190,000. With revisions, job gains have averaged 224,000 a month over the past three months. As usual, ambulatory healthcare services dominated healthcare hiring with its 9,900 new jobs, although that was a 27% drop from the 13,500 jobs added in June.

President Donald Trump's administration has imposed duties on steel and aluminum imports, provoking retaliation by the United States' trade partners, including China, Canada, Mexico and the European Union.

The data follow a factory survey earlier this week showing manufacturing growth cooled in July and executives were concerned about the impact of the trade war. A category called other ambulatory healthcare services dropped by 1,200 jobs, and offices of other healthcare practitioners lost 900 jobs. Faucher writes that as that happens, job growth will slow down because businesses will find it more hard to recruit new hires.

That's good news for workers without a high school degree and those without a college degree. As economic momentum continues, the labor force is still growing and unemployment is receding, resulting in a tick down in the unemployment rate and a rise in the employment-to-population ratio.

The Fed left interest rates unchanged on Wednesday while painting an upbeat portrait of both the labor market and economy.

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