Job Growth Slows, But Wages Still Heat Up

The job market created 187,000 new jobs in July, which was below the expectations of economists. Although the numbers show a slowdown in the economy, the July numbers are better than the June numbers which were revised down to 185,000 from the original 209,000 reported by the Bureau of Labor Statistics.

The original estimates of the number of jobs were around 200,000, with an unemployment rate of around 3.6 percent. The BLS jobs report, however, shows that the unemployment rate has dropped to just 3.5 percent. This is slightly above the lowest level seen since 1969.

Here is a breakdown of the places where jobs were created.

The healthcare industry added 63,000 new jobs in the last month. Social assistance (24,000), finance activities (19,000), and wholesale trade (18,000) were also contributors. Other services contributed to 20,000 of the total. This included 11,000 personal and laundry services.

The leisure and hospitality sector, which was a leader in recovery during the Covid pandemic, has added only 17,000 jobs. This is consistent with a trend of slowing growth after an average of 67,000 new jobs per month in the first quarter of 2023.

The totals for previous months were revised downward — June’s count was reduced to 185,000, a decrease of 24,000; and May’s estimate was lowered to 281,000, a reduction of 25,000.

The public sector increased hiring to recover from the major losses it suffered during the COVID-19 epidemic.

Recent labor market statistics have focused on wage growth. The Federal Reserve has used wage growth to determine whether inflation is still high. The growth in wages continued in July even though it slowed slightly.

Pay increases have decreased as the demand for workers has decreased. The Labor Department reported last week that employers spent 4.5% extra on wages and benefits from April to June in comparison with the same period a year ago. This was a slower increase than the 4.8% in the previous quarter.

Even so, wage growth is still higher than both the pace of inflation and that which economists consider to be consistent with a low, stable rate. Fed officials are likely to see a 3.5% wage growth per year as being consistent with an inflation rate near their 2% goal, assuming modest productivity increases by workers.

These numbers are encouraging for those who hope the Fed will hold off on a rate hike. Fed Chair Jerome Powell hinted at a possible rate hike before the end of the year. Some economists believe the Federal Reserve will hold off if the job market cools. The news about the labor market sparked a flurry of activity on Friday morning.

There are still some underlying concerns. The inflation in food prices continues to hit American families hard. This is causing consumers to be concerned.