US Economy Adds 528,000 Jobs in July

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The U.S. economy added 528,000 new jobs in July, topping the market estimate of 250,000, according to the Bureau of Labor Statistics (BLS).

The unemployment rate dipped to 3.5 percent, down from 3.6 percent in June. The labor force participation rate slipped to 62.1 percent

Average hourly earnings rose 0.5 percent month-over-month and 5.2 percent year-over-year. Both readings were higher than economists’ expectations of 0.3 percent and 4.9 percent, respectively. Average weekly hours also edged up to 34.6.

The number of people not in the labor force but wanting a job was unchanged at 5.9 million. The number of workers employed on a part-time basis for economic reasons surged by 303,000 to 3.9 million. The total number of multiple jobholders increased to 7.572 million, up from 7.013 million at the same time a year ago. 

Employment growth was broad-based in July, led by notable gains in leisure and hospitality (plus 96,000), professional and business services (plus 89,000), and health care (plus 70,000). 

Government jobs swelled by 57,000, construction positions rose by 32,000, and manufacturing employment grew by 30,000. The retail sector added 22,000 jobs. 

After the strong job numbers were published, the financial markets turned negative in pre-market trading. 

The Dow Jones Industrial Average and the Nasdaq Composite Index shed about 100 points, while the S&P 500 slipped 0.7 percent. Investors think that the Federal Reserve will continue raising interest rates as the labor market endures the tightening cycle, observers note. 

It could also reopen talks that the central bank could pull the trigger on a 100-basis-point rate hike, says Jan Szilagyi, CEO and co-founder of AI research firm Toggle. 

“For the Fed, this means maintaining a very hawkish stance, and can’t let go off the 75 bps pace – in fact, discussion about 100 bps will probably be reopened,” said Szilagyi. “It’s a negative for the market because of the risk of more aggressive tightening, and the prospect that the Fed hasn’t caught up with inflation after all.” 

White House press secretary Karine Jean-Pierre told reporters on Thursday that the administration has been expecting lower job numbers as part of a “transition to stable and steady growth.”

“So, as we’ve been saying for many months now—including the president—we’re in the transition to stable and steady growth,” she said. “And during that transition, what you’ll see instead of record-high-breaking jobs numbers that we’ve been seeing every month in the realm of 500,000 to 600,000 jobs on average per month, we’re expecting to be closer to 150,000 jobs per month.”

“And so that would actually be a sign of a success of this transition,” Jean-Pierre added. “And this kind of job growth is consistent with the low unemployment numbers that we’ve been seeing.”

Crunching the Labor Data

David Mericle, the chief U.S. economist at Goldman Sachs Research, contends that the data show the economy is trending underneath its long-term potential as the labor market experiences a rebalancing. Mericle believes this part of the economy still has more restructuring to go, adding that there has yet to be “convincing progress” on containing rampant price inflation and wage growth.

The financial markets weighed the jobs numbers th...

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