Economy adds 157K jobs in July, unemployment down to 3.9 percent

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The U.S. economy added 157,000 jobs in July, below expectations, as the job market cooled but remained strong amid a tightening labor market.

The unemployment rate fell to 3.9 percent from 4 percent in June, the Labor Department reported on Friday.

Estimates had been set at about 190,000 jobs in July.

{mosads}Despite the lower-than-expected jobs gains, the labor market produced 59,000 more jobs than previously reported in May and June.

Employers added 268,000 jobs in May and 248,000 in June.

“Job growth slowed a bit in July to 157,000, but that followed two straight months of very strong gains, and the job market is in great shape in the middle of 2018,” said Gus Faucher, chief economist at PNC.

After revisions, job gains have averaged 224,000 a month over the past three months, a sign of continued strength. 

Jobs growth has averaged 215,000 a month so far this year, above last year’s pace of 182,000.

“While job growth in July was lower than expected, there is no need to panic — 157,000 is still a good number, and this solid jobs report continues the longest streak of job growth on record,” said Martha Gimbel, director of economic research at Indeed.

“Average job growth so far this year is still higher than in 2016 and 2017, which is astonishing at this point in a recovery,” Gimbel said. 

The economy has added jobs for 93 straight months, beginning in October 2010 under President Obama. It is the longest streak of monthly jobs growth on record.

Wage growth remained unchanged, with average hourly earnings up only 2.7 percent for the year despite fewer workers who need jobs. 

The labor market is expected to produce steady jobs growth through this year and potentially into 2019 as concerns ramp up about the ability of employers to find qualified workers. 

Some economists are forecasting that the jobless rate could eventually hit a historic low in the mid-3 percent range.

“The unemployment rate will fall to about 3.5 percent by the beginning of next year, although job growth will slow somewhat as businesses find it more and more difficult to hire,” Faucher said.  

The Federal Reserve is likely to raise interest rates at its next meeting in September to 2.25 percent from 2 percent, in an effort to keep the labor market from reaching a boiling point.

“Overall, the report did little to change perceptions that the labor market is tight but has yet to begin overheating, and it keeps the Fed on track for a rate hike next month,” said Curt Long, chief economist with the National Association of Federally Insured Credit Unions.

Last week, the Commerce Department reported that the economy expanded at a robust 4.1 percent annual rate, the fastest pace in nearly four years, during the April to June quarter on the tailwind created by the Republican tax package and cuts in regulations.

President Trump took a victory lap after the new growth figure was released, saying in a speech at the White House that the country is growing “at the amazing rate” and that “we’re on track to hit the highest annual average growth rate in over 13 years.” 

Republicans are banking on a streak of good economic news to carry them in to the November midterm elections. The booming economy is the base of the GOP’s message to hold their congressional majority. 

But some GOP lawmakers and business groups are worried that Trump’s decision to levy hefty tariffs on close U.S. allies and China will erase any gains from the tax and regulatory cuts.  

The U.S. and China recently exchanged tariffs of $34 billion on each other’s exports, with billions more expected to come in the months ahead.  

This week, the Trump administration said the president is considering raising the tariff on $200 billion in Chinese goods to 25 percent from the initially proposed 10 percent, a plan quickly rebuked by a wide range of business groups from retailers to technology firms.  

The target list for the $200 billion is still under consideration and the level of the duties will be discussed at a hearing later this month. 

The Chinese government said on Friday that Beijing will move forward with tariffs of 5 percent to 25 percent on $60 billion of U.S. imports “to guard its interests” if the U.S. follows through with its threats of more duties on its imports here. 

Canada, Mexico and the 28-nation European Union have all imposed billions in retaliatory tariffs on U.S. goods over Trump’s tariffs on steel, aluminum and other goods.

A separate report on Friday showed that the nation’s trade deficit rose to $46.3 billion in June, up $3.2 billion from $43.2 billion in May, the Commerce Department said. 

Trump has said his goal in trade talks is to dramatically cut deficits with countries like China, arguing that the gap is a representation of how badly the United States has been treated on the trade front. 

Even with concerns growing about tariffs, manufacturers added 37,000 jobs in July. 

The construction sector added 19,000, bringing the industry total to 308,000 jobs over the year.  

Health care employment rose 34,000 and professional and business services hired 51,000 in July, for a total of 518,000 new jobs created in the past year.

Updated at 9:24 a.m.

Tags 2022 midterm elections Donald Trump economy Finance Jobs report Tariffs Trump economy Unemployment

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