WASHINGTON–The U.S. economy added 187,000 jobs during July, indicating the economy is cooling and likely lifting pressure on the Fed to ease up on the raising of rates.
The Labor Department figures remain strong and nearly match June’s downwardly revised 185,000 gain, the Labor Department said Friday. During, the average monthly employment gain was 400,000.
"While headline numbers were below-consensus, the July jobs report affirms a cooldown, rather than collapse, in the labor market against rising interest rates and tightening economic conditions,” said NAFCU Senior Economist Noah Yosif. “The unemployment rate trended down to 3.5%, new job openings exhibited modest deceleration, and average hourly earnings remained unchanged, but at historically low levels of growth, suggestive that the labor market is losing momentum at a healthy pace. These trends offer further support for the possibility of a soft-landing, which will require the Fed to synchronize its timing on monetary policy with the pace of deceleration in the labor market."
CUNA: 'Good News for Fed'
“The U.S. economy added 187,000 jobs in July, slightly softer than expectation. Job gains reported for May and June were also revised down by 50,000 combined," said CUNA Senior Economist Dawit Kebede. "This implies employers in the last three months added on average 218,000 jobs per month. This is robust job growth but cooler than previously reported. The average weekly hours also declined by 0.1 last month in another indication of the slowing job market. The unemployment rate edged down to 3.5%.
“Average hourly earnings increased 0.4% last month, equivalent to an annualized rate of 4.8%. Although wage growth had been moderating from its peak levels, it is still higher than the normal 3.5% growth rate consistent with a 2% inflation target.
“Slower job growth is good news for the Federal Reserve looking for a better balance in labor demand and supply in the fight to bring inflation down. On the other hand, wage growth is still hot, but it is expected to cool down as hiring slows.”
Unemployment Rate Falls
Other data points from the July report, according to the Department of Labor:
- The unemployment rate fell to 3.5% from 3.6% in June, remaining near a half-century low.
- Employers raised pay at the same rate as June, with average hourly earnings growing 4.4% in July from a year earlier, slower than last year but remaining well above the prepandemic pace.
- Temporary help services, tech and information companies, and retailers cut jobs in July, while healthcare employers added staff.