3 weeks ago
US hiring stalls: 23,000 jobs lost as wage growth slows
Every month, the government counts how many jobs exist in America.
In July, the country actually lost 23,000 jobs instead of gaining new ones.
Grown-ups had expected about 95,000 new jobs, so this was a big surprise.
It is a little like a lemonade stand that hoped to sell more cups but sold fewer instead.
Some workers are still busy: hospitals and health helpers added many jobs.
But hotels, restaurants and school districts lost a lot of jobs, partly because summer holidays change how the numbers are counted.
People's pay is also growing more slowly, while the prices of things they buy keep going up.
That means many families have less spare money.
Important people who set interest rates are watching these numbers closely.
They may decide to keep interest rates the same for now so the economy can get stronger.
US payrolls fell by 23,000 jobs in July, far below the 95,000 gain economists had forecast, and May and June figures were revised sharply lower.
Healthcare and social assistance added 22,600 jobs, while construction, manufacturing, professional services and the information sector also grew.
Leisure and hospitality lost 83,000 jobs over June and July, and local government fell by 57,000 jobs, including 49,600 in school districts.
Average hourly earnings rose just 3.2% year over year, the lowest in five years, while the latest Consumer Price Index showed prices up 3.5%.
The odds of a Federal Reserve rate hike at the September meeting fell to 40% from 55%, with economists citing uncertainty from AI adoption, slower immigration, higher oil prices and the war with Iran.
- Who
- US workers and employers, with commentary from economists at Wells Fargo, Navy Federal Credit Union, ZipRecruiter, PNC and ADP.
- What
- The US lost 23,000 jobs in July, far below the 95,000 gain forecast, while annual wage growth slowed to 3.2%, its lowest in five years.
- Where
- United States.
- When
- July, with the jobs report released on Friday; June and May figures were also revised downward.
- Why
- Employers face uncertainty from an aging population, slower immigration, higher oil prices, policy uncertainty, rapid AI adoption and the war with Iran, while seasonal adjustment effects distorted some sectors.
Labor market stalling view
Seasonal distortion view
Reading the July jobs data
Labor market stalling view
The report is bleak and signals the labor market is stalling, with anemic average gains of about 20,000 jobs over the past three months.
Seasonal distortion view
Much of the weakness reflects seasonal adjustment distortions in schooling and hospitality that typically reverse, rather than genuine job losses.
Federal Reserve interest rate decision
Labor market stalling view
Weak hiring and slow wage growth do not support demand-driven inflation, so the Fed is likely to remain on hold.
Seasonal distortion view
With inflation still elevated at 3.5%, a September rate hike remains a live possibility, with odds at 40% after falling from 55%.
Key facts
- July payroll change
- -23,000 jobs (forecast: +95,000)
- June revised
- +20,000 (from +57,000)
- May revised
- +66,000 (from +129,000)
- Healthcare jobs added in July
- +22,600
- Leisure and hospitality losses (June-July)
- -83,000
- Local government job decline
- -57,000 (49,600 in school districts)
- Average hourly earnings growth (annual)
- 3.2% (lowest in 5 years)
- Latest CPI inflation
- 3.5%
- Fed September rate-hike odds
- 40% (down from 55% a day earlier)
Quotes
Heather Long
Chief economist, Navy Federal Credit Union
“It’s difficult for me to believe that we’ve lost 83,000 jobs over the last two months in leisure and hospitality services, given that the World Cup has been going on. But that’s a very seasonal industry where we tend to see more hiring during the summer, and it could be that seasonal adjustment factors are off for some reason and are not picking up what’s truly reflected in the labor market.”
businesstoday.in
“This was a bleak report, and it signals the labor market is stalling again. You can explain away a few things for July and a few things for June; but if you step back and look at the bigger picture, the past three months have seen 20,000 average job gains – no matter how you look at it, that’s anemic.”
businesstoday.in
Sources
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