The U.S. labor market continues to cool.
The U.S. economy created 187,000 new jobs in July while the unemployment rate fell to 3.5%, the Bureau of Labor Statistics said Friday. Economists had expected job gains to total 200,000 with the unemployment remaining unchanged at 3.6%.
Job gains in July were the least since December 2020. Over the last year, job gains have now averaged 312,000 per month.
Wages, a closely watched indicator of how much leverage workers are exerting in the labor market, rose more than expected last month, rising 0.4% on a monthly basis and 4.4% over last year. Economists expected wages to rise 0.3% over last month and 4.2% over last year.
For the Federal Reserve, the slowdown in hiring is likely a welcome sign as it works to cool the labor market in an effort to tame inflation. Wage gains, however, are likely to signal to some Fed officials that additional rate hikes are needed to limit additional inflation pressures.
“The July jobs report is just one data point before the September FOMC meeting, but we think it offers enough evidence of cooling labor market conditions to weigh in favor of no additional rate hikes,” Nancy Vanden Houten, lead US economist at Oxford Economics, wrote in a client note on Friday. “However, an upside surprise in any of the forthcoming data on the labor market and inflation would put another rate hike back on the table.”
The Federal Reserve is set to announce its next monetary policy decision on Sept. 20. Last month, the Fed raise its benchmark interest rate by an additional 0.25%, bringing the fed funds rate to its highest level since 2001.
Click here to read the rest of the report from Myles Udland at Yahoo Finance.
