US job growth remains steady in July with 164,000 added
U.S. employers added 164,000 jobs in July, right in line with Wall Street's expectations — a fairly unnoteworthy number, but evidence that the record-long economic expansion is continuing to chug along at a healthy pace.
The unemployment rate remained steady at 3.7 percent, near a 50-year-low, while the labor force participation rate was also little unchanged at 63 percent. Average hourly earnings, meanwhile, rose by 8 cents to $27.98. Over the year, average hourly earnings have increased by 3.2 percent, slightly beating expectations of 3.1 percent growth but continuing to disappoint.
For an economy with historically low unemployment, wage growth continues to fall short of expectations. It's not a new development for the U.S. economy, however: Since 1979, productivity has risen six times faster than hourly compensation for the typical U.S. worker. Plus, analysts caution that the greatest salary gains are going to already high-earning employees.
"We are not yet in a sweet spot where we see higher wage growth, especially for those with lower incomes," said Robert Frick, a corporate economist at the Navy Federal Credit Union.
The number of positions the U.S. added in June dropped to 193,000, down from a previously reported 224,000, according to revised data from the Bureau of Labor Statistics. Fridays’ report comes after strong private sector growth in July, with employers adding a solid 156,000 jobs.
“Today’s job report shows the strength of the U.S. economy, despite several global headwinds,” said Tony Bedikian, managing director at Citizens bank.
Investors who wanted to see cause for a second interest rate cut by the Federal Reserve will likely be disappointed by the middle-of-the-road report.
Although Fed Chairman Jerome Powell said it was not the start of a “long series of rate cuts,” he also noted, “I didn’t say it was just one, or anything like that.” Policymakers, Powell said, will continue to monitor the economic outlook to determine whether a rate cut is warranted at the Fed’s September meeting.
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"The issue is more the downside risks and the shortfall in inflation," Powell said during a press conference. "We’re trying to address those. In addition, going forward, I would say, we’re going to be monitoring those same things, the evolution of trade uncertainty, of global growth and of low inflation. We’ll also, of course, be watching the performance of the U.S. economy ... We’ll be putting all of those together, and that’s how we’ll be thinking of policy going forward."