Jobs report underwhelms, and revisions hurt more than usual
Nick Rummell
MANHATTAN (CN) — After months of tiny cracks, the U.S. labor market is now starting to splinter, with the latest jobs report showing the U.S. economy has gained just 106,000 jobs in the last three months.
According to the U.S. Bureau of Labor Statistics, 73,000 jobs were added to the U.S. economy in July, half as many as the 147,000 jobs added last month and less than the roughly 100,000 jobs most analysts had predicted.
Downward revisions to the May and June jobs reports were dismal. While the Trump administration originally reported 286,000 jobs had been added to the U.S. economy over the two-month period, downward revisions cut that figure down by 125,000 jobs and 133,000 jobs, reflecting a “larger than normal” correction.
The unemployment rate also ticked back up to 4.2% after dropping in June to 4.1%. The unemployment rate for Blacks worsened once again, hitting 7.2% after rising to 6.1% last month. Corresponding data from the Labor Department showed that initial unemployment claims remained fairly steady throughout July, hovering around 220,000 per week.
“There was little to celebrate in the July employment report,” Thomas Ryan, North America economist at Capital Economics, wrote in an investor’s note, pointing to the concentration of job gains almost entirely in two sectors and the continued struggle in manufacturing.
However, Ryan said while the report is bad news for Main Street it may be good news for Wall Street. “The clear loss of hiring momentum in this report will embolden the [Federal Reserve] doves, raising the chance of a September cut,” he said.
Some sectors continue to grow, with health care gaining 55,000 jobs and social assistance employment continuing its upward trend, gaining 18,000 jobs in July. The federal public sector lost 12,000 jobs, though many of those laid off are still not being counted, hinting the number could be higher.
In contrast to the federal jobs report, the private sector employment report released on Wednesday by payroll company ADP came in slightly better than expected and was far better than the paltry 37,000 jobs added in June.
However, the report was nothing to brag about, as the U.S. private sector gained just 104,000 jobs in July, ADP reported. Two-third of the jobs gained were in service-providing industries, while nearly all the job increases came in Southern or Western states.
The changes in pay for private-sector workers also weakened slightly, with those staying at their jobs experiencing a 4.4% annual pay increase, down from the 4.5% annualized rate seen last month. Those changing their jobs continued to see a 7% annualized increase in wages.
“Our hiring and pay data are broadly indicative of a healthy economy,” Nela Richardson, chief economist at ADP, said in a statement. “Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient.”
Job openings fell slightly in June, according to the latest JOLTS report by the BLS, dropping from 7.5 million to 7.4 million. The JOLTS report, which lags a month behind other employment data, also noted that suits and firings largely remained unchanged last month.
“The JOLTS data for June show a labor market waiting in suspense for the Trump administration to settle on a final arsenal of country-specific tariffs,” Bradley Saunders, North America economist at Capital Economics, wrote in an investor’s note.
“While the federal layoff rate remains roughly where it was when Trump first took office, this should rise in the coming months given the Supreme Court’s recent decision to overrule a lower court and grant the administration permission to move ahead with its plans,” Saunders added.