US economy adds 215,000 jobs in July, but job market trouble spots linger
In terms of jobs added alone, July was another strong month for the US labor market. But at this point, those waiting for the rest of the report to catch up with the headline figure are likely growing weary.
The US economy added 215,000 jobs last month, just shy of consensus expectation for 225,000 jobs added, but still a strong showing, according to data released Friday by the Labor Department. The unemployment rate went unchanged at 5.3 percent 鈥� a seven-year low.
According to recent trends, it was a thoroughly average report. Over the past six months, the economy has added an average of 213,000 jobs per month 鈥� very close to July鈥檚 figure. Unemployment rates went virtually unchanged for every worker group, including adult men (4.8 percent), adult women (4.9 percent), whites (4.6 percent), blacks (9.1 percent), Asians (4.0 percent), and Hispanics (6.8 percent). The unemployment rate for teenagers, while still high, fell to 16.2 percent. The number of long-term unemployed, or those jobless for 27 weeks or more, also held steady.
Still, even the most humdrum of jobs reports are closely watched these days by analysts and investors because of the聽Federal Reserve鈥檚 looming decision on when to raise long-term interest rates, which have hovered around zero percent for years. The Fed has indicated that it will likely raise rates sometime this year, but the job market鈥檚 month-to-month performance may play a role in whether 鈥渟ometime this year鈥� means at its next meeting, in mid-September, or at its later December meeting.
After today鈥檚 report, it looks like the former, analysts say. 鈥淣on-farm payrolls came in just shy of forecasts, but it鈥檚 still yet another solid employment report,鈥� MarkIt economist Chris Williamson writes via e-mail. 鈥淲ith the Fed鈥檚 decision on the timing of the first rate rise 鈥榙ata dependent鈥�, today鈥檚 report does nothing to discourage the belief that a September hike is very much on the table, albeit by no means a done deal鈥ow inflation and cooling growth will create powerful arguments against rate hikes.鈥�
聽鈥淪eptember liftoff is a good bet if the economic data continue to cooperate,鈥� agrees MFR, Inc. economist Joshua Shapiro, in an e-mailed report. 聽鈥淩ecent public commentary from various Fed officials has been pointing in this direction, and we would expect such comments to be the primary means of Fed communication as the meeting date approaches.鈥� He adds that the Fed鈥檚 timing, whatever it is, won鈥檛 be a surprise to anyone 鈥� the Central Bank tries to avoid sudden movements, to avoid spooking the financial markets.
Despite the rate hike, however, there are still plenty of lingering concerns about the strength of the job market and the frustratingly stagnant buying power of most workers. Hourly earnings ticked up just five cents in July, and they鈥檝e grown just 2.1 percent over the past year even as the job market has tightened. The number of involuntarily part-time workers 鈥� those who would like a full time job but cannot find聽one 鈥� went unchanged. And labor force participation, one of the biggest trouble spots in recent reports, stayed near 40-year lows. 鈥淭he participation rate has been little changed for almost two years and is hovering around lows not seen since 1978,鈥� Shapiro writes. 鈥淭herefore conditions in the labor market are, to some extent, worse than indicated by the reported steep drop that has occurred in the unemployment rate.鈥�
Still, even with its shortcomings, the labor market data has been at least consistent for the past year or so, and at this point, predictable trends may be enough for the economy to withstand a small rate hike, 聽especially if even slow areas of the job market, like wages, at least continue to progress. 鈥淥f course it would be welcome news if we started experiencing faster job growth, or, perhaps more important, stronger gains in hourly pay for workers who have seen scant raises for years," Neil Irwin writes in the聽聽鈥淏ut鈥he fact that there are highly consistent signals about what is happening in the economy in the labor market actually is welcome in its own right.鈥澛�
