Did job growth maintain its momentum in July?
The monthly jobs report highlights this week’s economic news and is expected to show the labor market got off to a solid start in the second half of the year after healthy advances the first six months. Other releases will reveal the latest data on consumer spending and activity in the manufacturing and service sectors.
Consumer spending was sluggish in May after two strong months, and June may not be much better. Last month, a core measure of retail sales that excludes volatile items dipped and auto purchases were probably soft, Nomura economist Lewis Alexander notes. Economists expect the Commerce Department on Tuesday to report a modest 0.1% rise in consumer spending in June following a similar increase the prior month.
Manufacturing generally has perked up in recent months as a result of an improved global economy and the revival of many oil wells shuttered during crude’s price crash. In May, an index that tracks production, new orders, employment and other indicators showed the fastest expansion in nearly three years. Economists estimate the Institute for Supply Management (ISM) will an- nounce a modest decline in the measure in July that still reflects sturdy growth.
The service sector, which makes up about 80% of the economy, similarly has been humming along, partly because of the pickup in oil drilling. And while retailers have been buffeted by the shift to online shopping, retail hiring increased in June for the first time in five months, Alexander notes. Economists reckon ISM will report Thursday its non-manufacturing index slipped in July to a reading indicating crisp expansion.
The low, 4.4% unemployment rate has been expected to lead to weaker job growth as employers struggle to find available workers. But while payroll gains have moderated, they’ve been healthier than anticipated. Employment growth has slowed from an average 226,000 a month in 2015 to 180,000 so far this year.
Some economists point to a shadow labor supply that includes part-time workers who prefer full-time jobs and discouraged workers on the sidelines. Some of them are resuming their searches for full-time jobs, easing the worker shortage and allowing businesses to boost paychecks more slowly. Economists expect the Labor Department on Friday to report job gains of 183,000 in July. PNC Financial Services Group figures annual wage growth held steady at 2.5%.
The service sector, which makes up about 80% of the economy, has been humming along, partly because of the pickup in oil drilling.