Published: Sun, August 05, 2018
Finance | By Cynthia Curry

US Economy Adds Fewer Jobs Than Expected In July

US Economy Adds Fewer Jobs Than Expected In July

USA establishments added a net new 157,000 jobs, following the upwardly revised average gains in May and June of an outsized 258,000. May's jobs report was also revised higher to show 268,000 jobs were created that month, and over the last three months job gains have now averaged 224,000.

The US economy added fewer jobs than expected in July after a surge of hiring in the previous months. The economy grew at 4.1% during the second quarter, its fastest place in almost four years.

Manufacturing added 37,000 jobs in July, with most of the gains in durable goods, according to the report.

The unemployment rate came in at 3.9%, matching expectations and below June's 4%. In June, there was a surge in the number of people re-entering the labor force, while the number of those who gave up on their job searches fell. "Thus, either the unemployment rate isn't adequately capturing the true level of slack in the labor market, or wage pressures are likely to move down the pipeline sooner than later". Over the month, employment edged up in temporary help services (+28,000) and in computer systems design and related services (+8,000).

The overall recent surge of job gains may reflect, in part, confidence among some businesses that the Trump administration's tax cuts will accelerate growth - even though a growing roster of economic experts disagree with that assumption.

One area of concern in the jobs data released this week is a marked downturn in wages. The unemployment rate ticked down for both groups last month.

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Education and health services added 22,000 jobs last month, the fewest since October 2017, after boosting payrolls by 69,000 jobs in June. This is a noteworthy acceleration at this advanced stage of the labor market expansion, and, if sustained, will lead to further declines in the unemployment rate.

During the same period, inflation as measured by the Consumer Price Index rose slightly more - 2.8 percent. The core PCE hit the central bank's 2 percent inflation target in March for the first time since December 2011.

Wall Street finished higher despite the disappointing jobs report, which coincided with a surprising leap in the trade deficit.

People looking for jobs at factories had a better chance of being hired last month.

Employment also fell marginally in logging and mining, a sector that includes the oil industry, as well as in financial services, leisure and hospitality and in government.

A company representative, left, speaks with a job seeker during a United Career Fairs sales and management hiring event in Oak Brook, Ill., on July 17.

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