U.S. job growth cools in July, revisions show weaker-than-reported growth in first half of 2019
U.S. job growth cooled in July as the nation’s unemployment rate remained at 3.7% and only 164,000 workers were added to payrolls, well below last month’s totals and the monthly average for the year, the U.S. Labor Department reported Friday (August 2).
The U.S. Bureau of Labor Statistics (BLS) also revised the previously reported job growth totals in May and June to only 62,000 and 193,000, respectively. That downward revision from job additions of 72,000 and 224,000 in those months means there were 41,000 fewer jobs added to the economy than previously reported, officials said.
There were similar downward revisions in March and April as 75,000 jobs were reduced from previous U.S. payroll totals, pushing down average monthly growth to only 140,000 in the past three months. The slower job growth dovetails with similar data produced earlier in the week by the highly watched ADP National Employment Report, which showed private sector employment increased by 156,000 jobs from June to July.
“While we still see strength in the labor market, it has shown signs of weakening,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “A moderation in growth is expected as the labor market tightens further.”
Mark Zandi, chief economist of Moody’s Analytics, added: “Job growth is healthy, but steadily slowing. Small businesses are suffering the brunt of the slowdown. Hampering job growth are labor shortages, layoffs at bricks-and-mortar retailers, and fallout from weaker global trade.”
Nationally, the U.S. jobless rate remained just off a 50-year low of 3.6% However, the July jobs report did match Wall Street forecasts of 164,000 new jobs for the month but fell below the monthly average of 172,000 for the first half of 2019, BLS data shows. Earlier Wednesday, Federal Reserve Chairman Jerome Powell highlighted labor market conditions in lowering the target range for the federal funds rate to 2% to 2.25%.
“Consistent with its statutory mandate, the Committee (FOMC) seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures,” Powell said in a statement by the Federal Open Market Committee concerning the first interest rate cut following the Great Recession.
“In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective,” Powell said of the monetary policy action. Esther George and Eric Rosengren, who respectively head the Federal Reserve districts in Kansas City and Boston, voted to keep the federal funds rate at 2.25% to 2.5%.
REGIONAL JOB GROWTH EXPECTED TO SLOW
Last month, Arkansas’ jobless rate fell one-tenth of a percentage point to 3.5%, matching the state’s all-time low first touched twice in 2017 and 2018 as employment levels across the state peaked for the fifth straight month, according to the state Division of Workforce Services.
In the Mid-America Business Conditions Index released on Wednesday, the leading economic indicator showed economic growth over the past few months for the nine-state region stretching from Minnesota to Arkansas. That follows last week report from the U.S. Department of Commerce’s Bureau of Economy Analysis showing that real gross domestic product (GDP) grew at an annual rate of 2.1% in the second quarter, one full percentage point below the 3.1% reading in the first quarter.
“The regional economy expanded at a slower pace than the rest of the nation for the first half of 2019,” said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group. “For the first half of 2019, the national employment growth rate has been approximately twice that of the region. Not surprisingly last month, approximately 40% of supply managers reported that the shortage of qualified workers was the greatest economic challenge for their company for the next 12 months.”
Among the major worker groups, the unemployment rate for Asians increased to 2.8% in July. The jobless rates for adult men (3.4%, adult women (3.4%), teenagers (12.8%), Whites (3.3%), Blacks (6%), and Hispanics (4.5%) showed little or no change over the month.
Among the unemployed, the number of job losers and persons who completed temporary jobs was little changed at 6.1 million. Those unemployed less than 5 weeks rose by 242,000 to 2.2 million. The number of long-term unemployed, those out of work 27 weeks or more, rose by more than 180,000 1.48 million, accounting for more than one-fifth of those not working at 19.2%.
The labor force participation rate held at 63% in July, mostly unchanged from a month and year earlier. The employment-population ratio was also unchanged at 60.7% for the month and has been either 60.6% or 60.7% since October 2018.
The number of persons employed part-time for economic reasons declined by nearly 363,000 to 4 million in May. These individuals, who would have preferred full-time employment, were working part-time because their hours had been reduced or they were unable to find a full-time job.
There were 1.5 million persons marginally attached to the labor force for the month, hardly changed from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.
Among the marginally attached in May, there were 368,000 discouraged workers, or those persons not looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force had not searched for work for reasons such as school attendance or family responsibilities.
In May, average hourly earnings for all employees on private nonfarm payrolls rose by six cents to $27.83. Over the year, average hourly earnings have increased by 3.1%. The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in May. In manufacturing, the workweek and overtime were little changed at 40.6 hours and 3.4 hours, respectively.
The monthly revisions included a second change to March’s total nonfarm payroll data. BLS originally reported there were 196,000 new jobs added to the economy in the last month of the first quarter, but that total is now down to 153,000. Thus far in 2019, nonfarm employment has averaged 164,000 per month, compared to 223,000 per month in 2018.
In July, total nonfarm payroll employment increased by 164,000, in line with average employment growth in the first 6 months of the year. That total is down when compared with 223,000 per month average in 2018. In July, notable job gains occurred in professional and technical services (31,000), health care (30,000), social assistance (20,000), and financial activities (18,000).
Mining employment, which includes the nation’s oil and gas industry, declined by 5,000 in July, after seeing mostly flat growth in recent months. Manufacturing employment rose slightly in July by 16,000, which is also the monthly average for the year. job gains in the industry had averaged 22,000 per month in 2018.
Employment in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, changed little over the month, labor officials said. In July, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $27.98, the same as last month.
Over the past 12 months, average hourly earnings have increased by 3.2%. In July, average hourly earnings of private-sector production and nonsupervisory employees rose by 4 cents to $23.46.