U.S. hiring cooled in July after more-robust gains than previously reported, while the unemployment rate slipped back below 4 percent and wage increases remained subdued, reinforcing a picture of steady labor-market growth in line with the Federal Reserve’s outlook for gradual interest-rate hikes.
Non-farm payrolls advanced 157,000 after an upwardly revised 248,000 increase, Labor Department figures showed Friday. The median estimate of analysts surveyed by Bloomberg was for a gain of 193,000 jobs. Average hourly earnings increased 2.7 percent from a year earlier, unchanged from June and matching projections, while the jobless rate ticked down to 3.9 percent as forecast.
Healthy consumer spending and business investment, supported by tax cuts and a bump in federal spending this year, are resulting in job gains that continue to be more than sufficient to accommodate population growth in the 10th year of the economic expansion. While the data mark a solid start to the quarter and should keep the Fed on track for an interest-rate hike in September, a widening trade war threatens to curb growth in the labor market.
“Right now, concerns about tariffs are just that: concerns,” said Michael Gapen, chief U.S. economist at Barclays Plc in New York. “There’s no evidence that businesses are changing the way that they’re hiring and spending.”
Gapen said he’s optimistic that wage gains will pick up, ending the year at about a 3 percent increase. “There is such a thing as slack in labor markets being removed and scarcity puts upward pressure on prices somewhere,” he said.
The category of sporting goods, hobby, book and music stores lost 31,800 jobs, a decline probably tied to 33,000 job losses at shuttered retailer Toys “R” Us Inc. The sector’s drop in payrolls reflected unspecified “job losses in hobby, toy and game stores,” the Labor Department said.
Average hourly earnings rose 0.3 percent from the previous month, also matching the median estimate of economists, though that was up from 0.1 percent in June. Wages have remained in a holding pattern below the highs of the last expansion, despite persistent complaints from employers that they’re struggling to find skilled workers and job openings near a record high.
A separate measure, average hourly earnings for production and non-supervisory workers, also increased 2.7 percent from a year earlier, unchanged from the prior month.
Upward Revisions
Revisions added a total of 59,000 jobs to payrolls in the previous two months, according to the figures, resulting in a three-month average gain of 224,000. Monthly payroll gains of around 100,000 or even as low as 80,000 are seen as sufficient to push down the unemployment rate over time.