U.S. Employment Situation – July 2018

Released Friday, August 3, 2018

Download PDF version hereNon-farm Payrolls: +157,000 month-over-month (Cons: +193,000), +2.4 million year-over-year
Unemployment Rate: 3.9% (Cons: 3.9%), -0.1 ppt month-over-month, -0.4 ppt year-over-year
Weekly Hours: 34.5 hours (Cons: 34.5 hours), -0.1 hours month-over-month, +0.1 hours year-over-year
Hourly Earnings: $27.05, +0.3% month-over-month (Cons: +0.3%), +2.7% year-over-year

Quick Take:
Non-farm payrolls increased by 157,000 in July, which was below economists’ estimates. May and June non-farm payrolls, however, were revised up 59,000 collectively. Over the past three months, monthly payroll gains have averaged 224,000, higher than the average of 188,000 average jobs added since the beginning of 2010.

Average hourly earnings growth was in line with economists’ estimates, growing at +0.3% month-over-month. Average hourly earnings on a year-over-year basis grew +2.7%, unchanged from June’s year-over-year growth and slightly down from +2.8% year-over-year growth in May. Year-over-year hourly earnings growth has slowly moved higher from its post-recession low of +1.5% in October 2012 and July’s +2.7% year-over-year growth remains near the cycle high of +2.8% growth set in September 2017.

The unemployment rate declined -0.1 ppt in July, in line with economists’ estimates. Year-over-year, the unemployment rate declined -0.4 ppt.

Overall, July’s employment report continues a trend of healthy labor market data. The +157,000 month-over-month change in non-farm payrolls indicates a modest slowdown from recent monthly readings, but we don’t see the latest reading as outside the trend in labor market conditions we have seen in recent quarters. While wage gains remain modest compared to pre-crisis levels, we expect the trend of gradually rising wage growth to continue as compensation for qualified workers remain intense.

Notable Data:
July non-farm payroll gains were largest in professional and business services (+51,000), manufacturing (+37,000) and health care (+34,000). Over the past twelve months, manufacturing has added 327,000 jobs.

In July, the labor force participation rate was 62.9%, unchanged from June. The labor force participation rate has ranged between 62.7% and 63.0% for 26 consecutive months. The prime age (ages 25-54) participation rate rose +0.1 ppt in July to 82.1%.