In terms of jobs added alone, July was another strong month for the US labor market. But at this point, those waiting for the rest of the report to catch up with the headline figure are likely growing weary.
The US economy added 215,000 jobs last month, just shy of consensus expectation for 225,000 jobs added, but still a strong showing, according to data released Friday by the Labor Department. The unemployment rate went unchanged at 5.3 percent – a seven-year low.
According to recent trends, it was a thoroughly average report. Over the past six months, the economy has added an average of 213,000 jobs per month – very close to July’s figure. Unemployment rates went virtually unchanged for every worker group, including adult men (4.8 percent), adult women (4.9 percent), whites (4.6 percent), blacks (9.1 percent), Asians (4.0 percent), and Hispanics (6.8 percent). The unemployment rate for teenagers, while still high, fell to 16.2 percent. The number of long-term unemployed, or those jobless for 27 weeks or more, also held steady.
Still, even the most humdrum of jobs reports are closely watched these days by analysts and investors because of the Federal Reserve’s looming decision on when to raise long-term interest rates, which have hovered around zero percent for years. The Fed has indicated that it will likely raise rates sometime this year, but the job market’s month-to-month performance may play a role in whether “sometime this year” means at its next meeting, in mid-September, or at its later December meeting.
After today’s report, it looks like the former, analysts say. “Non-farm payrolls came in just shy of forecasts, but it’s still yet another solid employment report,” MarkIt economist Chris Williamson writes via e-mail. “With the Fed’s decision on the timing of the first rate rise ‘data dependent’, today’s report does nothing to discourage the belief that a September hike is very much on the table, albeit by no means a done deal…Low inflation and cooling growth will create powerful arguments against rate hikes.”
“September liftoff is a good bet if the economic data continue to cooperate,” agrees MFR, Inc. economist Joshua Shapiro, in an e-mailed report. “Recent public commentary from various Fed officials has been pointing in this direction, and we would expect such comments to be the primary means of Fed communication as the meeting date approaches.” He adds that the Fed’s timing, whatever it is, won’t be a surprise to anyone – the Central Bank tries to avoid sudden movements, to avoid spooking the financial markets.
Despite the rate hike, however, there are still plenty of lingering concerns about the strength of the job market and the frustratingly stagnant buying power of most workers. Hourly earnings ticked up just five cents in July, and they’ve grown just 2.1 percent over the past year even as the job market has tightened. The number of involuntarily part-time workers – those who would like a full time job but cannot find one – went unchanged. And labor force participation, one of the biggest trouble spots in recent reports, stayed near 40-year lows. “The participation rate has been little changed for almost two years and is hovering around lows not seen since 1978,” Shapiro writes. “Therefore conditions in the labor market are, to some extent, worse than indicated by the reported steep drop that has occurred in the unemployment rate.”
Still, even with its shortcomings, the labor market data has been at least consistent for the past year or so, and at this point, predictable trends may be enough for the economy to withstand a small rate hike, especially if even slow areas of the job market, like wages, at least continue to progress. “Of course it would be welcome news if we started experiencing faster job growth, or, perhaps more important, stronger gains in hourly pay for workers who have seen scant raises for years," Neil Irwin writes in the New York Times. “But…the fact that there are highly consistent signals about what is happening in the economy in the labor market actually is welcome in its own right.”