July Jobs: Below Expectations
Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics
July jobs came in below expectations. The monthly Bureau of Labor Statistics reports released today showed 157,000 jobs were created in July versus a projected 190,000. However, upward revisions to previous months’ figures were notable, adding 59,000 jobs. Hiring was in business and professional services, manufacturing, and health care. Other sectors were essentially unchanged.
The headline unemployment rate, U3, ticked down 0.1 percentage point, back to 3.9 percent where it was n May, that is, reversing last month’s tick up to 4 percent. The broader measure of labor underutilization, U6, declined 0.3 percentage points to 7.5 percent.
Average hourly earnings rose 2.7 percent year-over-year, essentially continuing the recent modest growth trend in that figure.
This is not a stellar report, especially in light of the recent strong GDP showing for the year’s second quarter. But it is not alarming in any sense – just somewhat disappointing.
About the Q2 GDP report released last week: While encouraging, it should be viewed cautiously. Both exports and consumption came in quite strong, but that growth is likely to be at least partially reversed in the coming quarters. The surge in exports that boosted the quarter’s growth was largely attributable to foreign importers trying to get their exported goods in before tariffs go into effect. That shifted a substantial amount of activity from the remainder of the year into the second quarter. A weaker second half is now baked into the upcoming numbers; further disruptions to trade appear likely with this week’s announcement of more “intended” tariff hikes.
About the Author
Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist.
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