Labor market much worse than anticipated: Report

The U.S. labor market showed fresh signs of slowing in July, adding fewer jobs than expected and posting the highest unemployment rate since 2021. Knewz.com has learned that the Labor Department recently reported that the economy added 73,000 jobs in July, well below the 106,000 that economists had forecasted.

Job gains fall short of expectations

The unemployment rate rose to 4.2%, up from 4.1% in June. The jobless rate has hovered between 4% and 4.2% since May 2024, but July’s figure represents the upper end of that range. Furthermore, labor force participation continued to decline, falling to 62.2% in July from 62.3%. The employment-population ratio also ticked down. Adding to concerns, revisions to earlier data painted a weaker picture of hiring this spring. June’s job growth, originally reported at 147,000, was cut to 14,000. May’s tally was revised from 144,000 to 19,000.

Wages continued to climb

Despite softer job creation, wages continued to rise. Average hourly earnings rose to $36.44 in July, up from $35.07 a year earlier, a 3.9% increase. Month-over-month, wages grew by 0.3%, compared to a 0.2% rise in June. Year-over-year earnings growth has hovered between 3.8% and 3.9% since January. Laura Ullrich, the director of economic research in North America at the Indeed Hiring Lab, said in a statement that the job market continues to be in a low-hire, low-fire environment, especially in traditionally white-collar fields.

Labor market in an ongoing slow but steady state

The labor market continues to move at a gradual pace without major swings. Recently released figures show that applications for unemployment benefits, a gauge of layoffs, remain low. Earlier reports pointed to fewer available job openings in June, while the quit rate held steady at 2% for the third consecutive month. A July survey from the Conference Board found more people saying jobs are abundant, but also more respondents reporting difficulty securing work. Some job seekers said in a statement to Business Insider that they have expanded the types of positions they are applying for in an effort to improve their chances. “What you see is, by many many statistics, the labor market is kind of still in balance,” Federal Reserve Chair Jerome Powell said at a press conference.

Healthcare offsets losses while other industries suffer

Nearly all of July’s job gains came from one sector: healthcare and social assistance. Marc Goldwein of the Committee for a Responsible Federal Budget noted in a post on X that “all 73,000 new jobs in July were in health care and social services.” Healthcare employment alone rose by 55,400 from June to July, highlighting the sector’s resilience. “Healthcare’s steadiness stands in contrast to the rest of the job market, which has been more volatile over the last few years, and in particular has been very soft over the last few months,” Daniel Zhao, chief economist at Glassdoor, said in a statement. By contrast, several other industries lost ground. Professional and business services, a traditionally white-collar field, saw declines, as did manufacturing. Employment in the federal government also dropped by 12,000.

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