U.S. Adds 164,000 Jobs in July

Technology, health care sectors breathe life into economy

Roy Maurer By Roy Maurer August 2, 2019
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​U.S. employers added 164,000 jobs in July, and the unemployment rate held at 3.7 percent, according to the latest Bureau of Labor Statistics (BLS) report. Average monthly job growth is lower this year compared to the first seven months of 2018, but service-sector industries remain a steady source of job gains, and manufacturing employment far exceeded expectations.

"Job growth in 2019 continues to be resilient, particularly in industries like professional and business services, health care, social assistance, and financial activities," said Julia Pollak, a labor economist at employment marketplace ZipRecruiter. "Monthly job gains have cooled since 2018, however, when they averaged a tremendous 223,000 per month on average. They've averaged 165,000 in 2019 so far—less than in each of the prior eight years—and only 140,000 per month in the last three months."

The total for the last three months was brought down by revisions to previous data—41,000 jobs were deducted from the total job gains for May and June.  

"With government stimulus fading and the economy facing headwinds from the trade war [with China], job growth is slowing down, but shouldn't be cause for concern for job seekers," said Martha Gimbel, research director for job search engine Indeed's Hiring Lab. "The economy is still expanding, just at a slower pace," she said.

"July's jobs report had the pitch-perfect trifecta—wages are up, work force participation is up, and strong jobs gains continue," said Becky Frankiewicz, president of ManpowerGroup North America. "Strong jobs growth means companies need to work harder than ever to find people with the right skills, which is why we've seen more companies commit to upskilling in the last two months than we've seen in the last two years. The next step is to ensure these training programs are closely aligned with future roles in growth industries and that we create career pathways to help people get there."

Service Sectors Keep Growing

Job gains in July were led by professional and business services, which includes many technology jobs (38,000) and the nation's booming health care industry (30,000). Other industries showing strong gains include social assistance (20,000), finance (18,000 jobs), government (16,000) and education (15,700).

Sectors that lost jobs in July include information, which includes traditional media and publishing (-10,000 jobs), mining and logging (-5,000 jobs), the retail trade sector (-3,600 jobs), and utilities (-400 jobs).

Most recent job losses have been concentrated in the goods sector, Gimbel said. "Job growth in the three industries that make up the goods sector—mining and logging, construction, and manufacturing—account for almost 60 percent of the slowdown despite being only 14 percent of the jobs."

She added that education and health services have been a steady source of growth throughout the recession and recovery. "Average growth in education and health services is the bright spot—it is 9,000 jobs higher than it was over the same period last year, an increase of 20 percent. The growth in this industry is entirely about increased hiring in health care, which is up by almost 35 percent."

Manufacturing jobs rebounded by 16,000 jobs in July, surpassing industry projections. "Manufacturing industry indicators released this week all showed substantial declines, but manufacturing employment growth was strong in June and July after a weak start to the year, despite the supply chain difficulties and input cost growth that tariffs have caused for many manufacturers," Pollack said.

Unemployment Stays Low

The BLS report showed that the national unemployment rate remained below 4 percent for the 17th consecutive month.

The U-6 unemployment rate—a broader measure capturing both the unemployed, underemployed and those too discouraged to seek work—declined to 7 percent in July, its lowest level since December 2000.

"The share of workers stuck in part-time work hit its lowest rate in this recovery, and the long-term unemployment rate hit its pre-recession low," Gimbel said. "Those numbers are important reminders that continued expansion in the labor market helps workers who are most struggling."

Glassdoor senior economist Daniel Zhao noted that the labor force participation rate—which includes people who are working and those looking for work—edged up by 0.1 percentage point to 63 percent. "As the labor market continues to tighten, an uptick in these numbers signals there are still more workers on the sidelines ready to rejoin for higher pay and jobs," he said.

The labor force participation rate for prime-age adults (ages 25-54) decreased by 0.2 percentage point to 82 percent. "The rate of workers age 25-54 with a job has stopped improving year-over-year," Gimbel said. "Even as the unemployment rate leveled off, that number had kept improving, reflecting workers coming back into the labor force. The lack of continued improvement there is disheartening."

Wages Still Confound

Average hourly earnings increased 8 cents in July to $27.98, remaining above 3 percent for the 12th straight month. "Year-over-year growth in average hourly earnings perked up to 3.2 percent in July, but pay growth is still below its February 2019 peak of 3.4 percent, a serious concern for the health of the recovery," Zhao said.

In addition, Pollack noted that average annual growth in weekly earnings has slowed throughout the year, from 3.5 percent in January to 2.6 percent in July. "This is disappointing, given that weekly earnings growth has been on an upward trend for the past four years," she said. "The weakening wage growth may reflect business worries about slowing global growth and trade uncertainties."

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