USA employers add 157,000 jobs, jobless rate hits 3.9 per cent

Randal Sanchez
August 5, 2018

Employers pulled back on hiring in July, but the job gains were still enough to lower the USA unemployment rate a tick to 3.9 percent from 4 percent. Construction companies hired 19,000 more workers after increasing payrolls by 13,000 jobs in June.

And the underemployment rate - which includes discouraged workers no longer searching for work, as well as involuntary part-time workers - dropped to 7.5 percent, the lowest in 17 years, from 7.8 percent. Economists forecast that employers added 191,000 jobs in July, down from 213,000 in June but easily enough to lower the unemployment rate over time.

"This is not a labor market in which you're going to get your wish list candidate", Wright said.

This trend is unlikely to persist, said Ellen Zentner, Morgan Stanley's chief USA economist. This suggests that the trade disputes between the USA and China are not yet slowing down hiring in manufacturing. Below that was outpatient care centers, adding 4,300 jobs. "There is such a thing as slack in labor markets being removed and scarcity puts upward pressure on prices somewhere", he said.

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"The important point is that there is no sign of overheating but that aggregate wages and salaries (jobs x hours x earnings) are growing at a brisk pace", Neil Dutta, the head of USA economics at Renaissance Macro, said in a note. Despite many company executives complaining that they can not find workers to fill open positions, wage growth remains sluggish.

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. The only time in the recorded history the rate was lower was in the 1960s.

Manufacturing added 37,000 jobs in July, with most of the gains in durable goods, according to the report.

"While this increased employment is undoubtedly good news, job growth exacerbates the monumental manufacturing workforce shortage", she said. In the service sector, hiring of 118,000 was the lowest since December, partly reflecting the cuts at Toys "R" Us.

The percentage of employed Americans held steady at 63 percent and an increase of 51,000 workers was noted in the business and professional services sector. The number of unemployed people rose to 6.3 million. By contrast, growth exceeded five percent in twelve out of thirty years from 1950-1980.

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