UNEMPLOYMENT FALLS TO 3.9 PERCENT
Job growth slower than expected as hiring slows
Employers pulled back on hiring in July, but the job gains were still enough to lower the U.S. unemployment rate a tick to 3.9 percent from 4 percent.
Employers added 157,000 jobs last month, a modest gain, the Labor Department said Friday. That’s below the 215,000 average for the first seven months this year, but economists said the decline will likely prove temporary.
Consumers are spending freely and businesses are stepping up their investment in buildings and equipment, accelerating growth. That’s raising demand for workers in industries ranging from manufacturing to construction to health care. The economy expanded at a 4.1 percent annual rate in the April-June quarter, the strongest showing in nearly four years.
The smaller job gain likely reflected some one-time factors, analysts said. Local governments cut 20,000 jobs, the most in more than two years. Most were in education, suggesting some of the decline reflects the start of summer school holidays.
And sporting goods, hobby and toy stores shed 32,000 jobs, by far the most on records dating back to 1990. That is the result of the Toys R Us bankruptcy, economists said.
Excluding those factors, hiring in July would have been closer to the monthly average this year.
The government also revised hiring totals for May and June to show another 59,000 jobs were added in those months.
“This job growth is nothing to be disappointed about, particularly at this stage of the recovery,” said Martha Gimbel, director of economic research at job search website Indeed. The economy is now entering its 10th year of expansion, and hiring has actually accelerated this year compared with 2017, surprising most analysts.
Stocks rose moderately after the report was released. The Dow Jones industrial average increased 82 points in mid-day trading to 25,408 and closed at 25,462.
Average hourly pay gains remained modest, increasing 2.7 percent from a year earlier, the same as the previous two months. That has puzzled Federal Reserve Chairman Jerome Powell and many economists. Typically, when unemployment has fallen below 4 percent in the past, wages have increased at a faster pace.
With rising gas prices pushing up inflation, Americans actually saw their inflation-adjusted pay decrease in the past year. Consumer prices rose 2.9 percent in June from a year earlier, more than the average wage gain.