U.S. jobless rate drops to 3.9%. in July; 157000 new jobs created

Sean Reid
August 5, 2018

Last week, the Commerce Department reported that gross domestic product expanded at an annual rate of 4.1 percent in the second quarter, the fastest pace in almost four years.

Martha Gimbel, director of economic research for the job board Indeed, said the job growth was "amazing".

Businesses are also getting less picky in their hiring. These employment gains were offset by a decline of 32,000 in sporting goods, hobby, book, and music stores, reflecting job losses in hobby, toy, and game stores. The consensus on Wall Street calls for the central bank to raise rates twice more this year, in September and December. However, the report also shows wage gains were "pathetic", according to one economist. Wages were up 2.7 percent for the 12 months ended July 31, the same annual pace as the previous month and an improvement over the sluggish 2 percent wage gains earlier in the recovery.

The number of people working part time for economic reasons was basically the same in July as it was in June - around 4.6 million.

The labor market has accelerated as the economy expands. Most service sectors posted below-trend gains after a very strong prior two months, with only leisure and hospitality (+40,000) and professional business services (+51,000) posting solid gains. A shorter workweek has the effect of boosting average hourly pay. More hours has helped lift average weekly earnings for retail workers in the past year more quickly than for workers overall.

"House price appreciation has exceeded wage growth for six years, so any signal that wage growth may be closing the gap is good news", said Fleming. That has puzzled Federal Reserve Chairman Jerome Powell and many economists.

During the same period, inflation as measured by the Consumer Price Index rose slightly more - 2.8 percent. Economists were watching manufacturing closely for signs of a drag from the Trump administration's escalation of trade tensions with China and allies.

So far this year, job growth has averaged 215,000 per month, above last year's pace of 182,000, noted PNC chief economist Gus Faucher.

Transportation payrolls dropped by 1,300 jobs last month, with transit and ground transportation employment declining by 14,800 jobs. Yet auto fix work requires more technical skills than the past because of the increasing concentration of computers and electronics in newer cars.

"The more you make an employee healthy and happy, the more that they're going to stay with you", England said.

Other reports by

Discuss This Article