U.S. job­less rate drops to 4.3%

Com­pa­nies add 209,000 work­ers in July, beat­ing fore­casts. But wage growth is slower than ex­pected.

Los Angeles Times - - BUSINESS - By Sa­man­tha Ma­sunaga

U.S. job growth re­mained steady in July, though work­ers are still largely see­ing slower wage gains, ac­cord­ing to data re­leased Fri­day by the U.S. Labor Depart­ment.

Some of the high­lights of July’s jobs re­port:

U.S. em­ploy­ers added 209,000 net new jobs, slightly above an­a­lysts’ ex­pec­ta­tions.

The un­em­ploy­ment rate ticked down slightly to 4.3% from June’s 4.4% and matched May’s 16-year-low.

Av­er­age hourly earn­ings in­creased by 9 cents, or less than 1%, to $26.36 in July.

With jobs num­bers com­ing in slightly above ex­pec­ta­tions and wages mov­ing lat­er­ally, Joseph Seydl, cap­i­tal mar­kets econ­o­mist with J.P. Mor­gan Pri­vate Bank, de­scribed the re­port as “busi­ness as usual.”

“There’s a de­mand for labor, but it’s not over­heat­ing on the wage front,” he said.

An­a­lysts de­scribed the re­port in pos­i­tive but mea­sured terms and noted that the labor mar­ket is continuing to im­prove.

“While the pace of jobs cre­ation in 2017 may not be as strong as the year be­fore, it’s still re­spectable for ma­ture eco­nomic ex­pan­sion,” said Mark Ham­rick, se­nior eco­nomic an­a­lyst for con­sumer fi­nan­cial ser­vices firm Bankrate.com.

Pres­i­dent Trump trum­peted the num­bers in a tweet Fri­day morn­ing, call­ing them “ex­cel­lent.”

An­a­lysts said the job gains show em­ploy­ers are largely still op­ti­mistic about the econ­omy.

“So far, the econ­omy and fi­nan­cial mar­kets are per­form­ing de­spite the noise be­ing gen­er­ated by Wash­ing­ton, D.C.,” Ham­rick said.

Con­sumer and busi­ness spend­ing are both “ef­fi­cient,” but not quite ro­bust, he said.

June’s job growth num­bers were re­vised up to 231,000 from 222,000, while May’s num­bers were re­vised down to 145,000 from 152,000.

The food and bev­er­age ser­vices, pro­fes­sional and busi­ness ser­vices and health­care sec­tors all saw job gains last month. So far this year, job growth as a whole has av­er­aged about 184,000 per month, com­pared with a 187,000 av­er­age monthly gain in 2016.

Job growth in the food and bev­er­age ser­vices sec­tor — which added 53,000 po­si­tions in July and 313,000 so far this year — is es­pe­cially no­table since it in­di­cates a fur­ther change in con­sumer spend­ing habits.

While con­sumers have cut back on spend­ing at brick-and-mor­tar stores, they are more in­ter­ested in go­ing out to eat, which af­fects the broader labor mar­ket, said Cathy Bar­rera, chief eco­nomic ad­vi­sor for job-search site ZipRe­cruiter.

“We’re see­ing a shift in how con­sumers are spend­ing their time, and that’s been hav­ing an im­pact on ex­actly where the jobs are,” she said.

Ware­hous­ing and trans­porta­tion jobs also saw an in­crease in July, prob­a­bly helped by the con­tin­ued uptick in e-com­merce sales.

While the av­er­age hourly wage has in­creased 2.5% year over year, econ­o­mists said th­ese gains are not quite as high as ex­pected when paired with the low un­em­ploy­ment rate.

His­tor­i­cally, wages have grown when the un­em­ploy­ment rate is be­low 5%, said Bar­rera of ZipRe­cruiter.

The lag­ging wage growth could be at­trib­uted to the job growth in tra­di­tion­ally lower-paid sec­tors, such as leisure and hospi­tal­ity and the restau­rant in­dus­try. For ex­am­ple, the leisure and hospi­tal­ity sec­tor added 62,000 jobs in July.

The labor par­tic­i­pa­tion rate for work­ers with­out a high school di­ploma has also started to rise.

The num­ber of part-time work­ers who would have pre­ferred full-time em­ploy­ment re­mained es­sen­tially un­changed in July at 5.3 mil­lion.

Jay L. Clen­denin Los An­ge­les Times

THE FOOD AND BEV­ER­AGE ser­vices sec­tor added 53,000 po­si­tions in July. Above, bar­tender Laura Lind­say de­liv­ers drinks in Stu­dio City in 2016.

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