Employers add 187,000 jobs as hiring remains solid
U.S. businesses added 187,000 jobs in July, keeping pace with June's solid hiring as employers sought to add staff amid a tight labor market.
Hiring was slightly below the expectation from analysts polled by FactSet that employers had added 200,000 new jobs last month. The unemployment rate edged down to 3.5% from 3.6% in June, the Labor Department said on Friday.
Even so, job growth has become more muted than earlier this year, partly as the Federal Reserve has sharply boosted interest rates over the past year, making it costlier for businesses to expand. Even though hiring is cooling, employers are still adding new jobs, easing some concerns that the interest rate hikes could tip the economy into a recession.
"The U.S. jobs report was near expectations for July, but the labor market is softening as many employers navigate changing circumstances," said Eric Merlis, managing director and co-head of global markets at Citizens, in a Friday email.
He added, "As the Fed works to curb inflation by raising rates to slow the economy, monthly jobs numbers provide a key measure of the impact and they continue to show the resilience of the economy."
July's data marks a slowdown from the average monthly hiring over the prior 12 months, when employers on average added 312,000 new positions each month, the Labor Department said. Businesses added jobs last month in health care, social assistance, financial activities and wholesale trade.
Meanwhile, the Federal Reserve is monitoring the economy for signs that inflation, which hit a four-decade high last year, is tempering in response to its series of interest rate hikes. The central bank wants to guide inflation downward to a 2% rate, although in June it stood at 3.1%, still above that goal.
"Slower job growth in July could be a welcome sign for the Fed, as they seek to prevent a wage-price spiral, where higher wages due to the low supply of workers lead to increased costs for companies that may subsequently pass on higher prices to consumers," noted Stephen J. Rich, CEO of Mutual of America Capital Management, in a Friday email.
Wages rose 0.4% in July, to an hourly average of $33.74, the Labor Department said on Friday. That matched June's wage increase, and was slightly higher than the 0.3% increase expected by some analysts. On an annual basis, average earnings in July increased 4.4% from a year earlier, with wage growth ticking up for production and non-supervisory workers, who make up about 82% of the workforce.
"[W]ages did not ease as expected, which will be disappointing to policymakers," noted Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
In June, businesses added about 209,000 jobs, although the Labor Department revised the number downwards to 185,000 jobs on Friday.