July Jobs Report: Payrolls Rise 157,000 and Unemployment Rate Drops to 3.9%

Posted August 05, 2018

Employers pulled back on hiring in July, but the job gains were still enough to lower the US unemployment rate a tick to 3.9 percent from 4 percent. The economy needs to create about 120,000 jobs per month to keep up with growth in the working-age population.

The unemployment rate fell to 3.9% from 4% as expected, moving closer to an 18-year low.

Among the major worker groups, the unemployment rates for adult men (3.4%) and Whites (3.4%) declined in July.

The decline in the jobless rate reflected a 284,000 decline in the number of unemployed people in the workforce, while the number of employed increased by 389,000.

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The economy expanded at a 4.1 per cent annual rate in the April-June quarter, the strongest showing in almost four years.

In its trade report, the Commerce Department said the United States deficit in goods and services rose 7.3% to $46.3 billion in June from $43.2 billion in May.

Despite the attention given to the "retail apocalypse", retailers have actually added 96,000 jobs in the past 12 months.

"Small business owners are continuing to show that they're looking to hire and willing to pay more to hire the right employees", NFIB Chief Economist William C. Dunkelberg said. Typically, businesses raise wages when it's hard to find the talent they want, but annual wage growth remained at a tepid 2.7 percent, the Labor Department said. Hospitals added 6,800 jobs in July, 36% fewer than the 10,600 new jobs added in June, a month that represented a massive hiring spike from sluggish May growth.

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The gains came from white-collar professional firms as well as manufacturing which filled 37,000 jobs. Average hourly earnings increased 2.7 percent from a year earlier, unchanged from June and matching projections, while the jobless rate ticked down to 3.9 percent as forecast. That kept the annual increase in wages at 2.7% in July.

Transportation payrolls dropped by 1,300 jobs last month, with transit and ground transportation employment declining by 14,800 jobs.

The report missed most analysts' expectations.

"While this increased employment is undoubtedly good news, job growth exacerbates the monumental manufacturing workforce shortage", she said.

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Hiring in the goods-producing sector rose by 52,000, in line with its strong recent trend, while job growth in the service-providing sector moderated to 118,000 from outsized 182,000 and 204,000 gains in June and May, respectively.