U.S. employers added 114,000 jobs in July, dropping significantly from last month’s gains and falling short of the 175,000 forecasted. Healthcare and social assistance firms accounted for more than 50% of hiring, and the hospitality and transportation/warehousing sectors saw significant growth month-over-month. Unemployment continued its upward trajectory at 4.3%, the highest rate since October 2021. Wage growth rose slightly to 3.6% but marks the smallest year-over-year gain since May 2021.  

The Numbers 

114,000: U.S. employers added 114,000 jobs in July.  
 
4.3%: The unemployment rate rose to 4.3%.  
 
3.6%: Wages rose 3.6% over the past year. 

The Good  

The economy continues to add jobs, marking the 43rd straight month of job growth. This resilience is notable given the Federal Reserve’s aggressive interest rate hikes over the past two years. Some sectors showed particular strength, with healthcare and social assistance firms adding 64,000 jobs, accounting for 56% of hiring. The leisure and hospitality sector also saw gains, adding nearly 26,000 jobs. The labor force participation rate increased slightly to 62.7%, indicating that more people are entering the job market. Wage growth, while slowing, still outpaces recent inflation, which could help maintain consumer spending power. 

The Bad  

Job growth significantly undershot expectations, suggesting a loss of momentum in the labor market. The unemployment rate jumped to 4.3%, its highest level since October 2021, marking the fourth consecutive month of rising unemployment. This triggered The Sahm Rule, a historically reliable recession indicator, raising concerns about the economy’s trajectory. Average hourly wage growth slowed to 3.6% year-over-year, the smallest gain since May 2021. The jobs count for May and June was revised down by a combined 29,000, further highlighting the cooling trend in the labor market. 

The Unknown  

Economists, including Claudia Sahm herself, caution that unique post-pandemic factors like increased immigration may be affecting the Sahm Rule’s reliability in this case. The Federal Reserve’s next moves are uncertain, with some analysts now predicting a potential 50-basis point cut in September. It remains to be seen whether this jobs report represents a temporary slowdown or the beginning of a more significant economic shift. Additionally, the impact of Hurricane Beryl on the July figures adds another layer of complexity to interpreting the data. 

Conclusion  

July’s jobs report paints a picture of a cooling labor market, with slower job growth, rising unemployment and moderating wage increases. While the economy continues to add jobs, the pace has significantly slowed, and signs of weakness are becoming more apparent. This cooling could be seen as a necessary step towards a more balanced labor market and could help ease inflationary pressures. However, it also raises concerns about the potential for a harder economic landing. The Federal Reserve faces a delicate balancing act while the interplay between employment trends, wage growth, inflation and monetary policy shape the economic landscape in the coming months. 

U.S. employers added 206,000 jobs in June, slightly exceeding economists’ forecasts of 190,000. The public sector led job gains with 70,000 jobs added, followed by healthcare with 48,600. The unemployment rate ticked up to 4.1%, the highest level since November 2021. Year-over-year wage growth cooled to 3.9%. 

The Numbers 

206,000: U.S. employers added 206,000 jobs in June. 

4.1%: The unemployment rate rose to 4.1%.  

3.9%: Wages rose 3.9% over the past year.  

The Good  

June’s job growth surpassed expectations, with payrolls expanding by 206,000 compared to the 190,000 forecasted by economists. This marks the 42nd consecutive month of job growth, the fifth-longest employment expansion on record. The public sector, particularly local government, showed significant growth and healthcare continued its strong hiring trend, adding 48,600 jobs. Overall, gains were more broad-based than previous months. This diversity can often signal a more stable job market overall. Wage growth, while cooling, still outpaces inflation at 3.9% year-over-year—a positive sign for consumer spending and economic health. 

The Bad  

Despite the solid job gains, there are indications that the labor market is losing some steam. The unemployment rate ticked up to 4.1%, crossing the 4% threshold for the first time since November 2021. This continues a gradual upward trend we’ve seen over the past year. Job openings have also been on a downward trajectory since their post-pandemic peak. While this could suggest a better balance between labor supply and demand, it also means job seekers might find the market a bit more competitive than in recent years.  

The Unknown  

The persistent question is how the Federal Reserve will interpret this jobs report in relation to its dual mandate of price stability and maximum employment. The cooling labor market, combined with easing inflation, has increased expectations for potential rate cuts— market watchers are predicting September as a possibility. However, the Fed has consistently emphasized that they’ll be looking at a broad range of economic indicators, not just jobs numbers, to guide their decisions. Therefore, future policy decisions will likely depend on upcoming economic data. 

Conclusion  

June’s jobs report presents a nuanced picture of the U.S. labor market. While job growth remains robust and broad-based, signs of cooling are evident in the rising unemployment rate and slowing wage growth. This moderation could be seen as positive, potentially bringing the job market into better balance without a harsh downturn. However, it also means both job seekers and employers may need to adjust their expectations in the coming months. As we move into the second half of 2024, all eyes will be on whether this “soft landing” can be sustained, or if more significant shifts in the labor market are on the horizon. The interplay between job growth, wage increases and the Fed’s policy decisions will be crucial in shaping the economic landscape ahead. 

U.S. employers added 272,000 jobs in May, exceeding economists’ forecasts of 190,000. Hiring was broad-based across sectors including healthcare (+68,000), government (+43,000) and leisure/hospitality (+42,000). Despite strong job growth, there was an uptick in unemployment, which reached the highest level since January 2022 at 4.0%. Wage increases also outpaced predictions, with a year-over-year increase of 4.1%.  

The Numbers 

272,000: U.S. employers added 272,000 jobs in May. 

4.0%: The unemployment rate rose to 4.0%.  

4.1%: Wages rose 4.1% over the past year.  

The Good 

May’s job growth significantly outpaced expectations, with payrolls expanding by 272,000 compared to the 190,000 forecasted by economists. Hiring was broad-based across sectors like healthcare (+68,000), government (+43,000), leisure/hospitality (+42,000), professional services (+33,000), and even rate-sensitive areas like construction and manufacturing. The report signals the resilience of the labor market despite the Fed’s aggressive interest rate hikes over the past year to combat inflation. Wage growth also accelerated, with average hourly earnings up 4.1% year-over-year. For American workers, the recent stretch of sturdy job and income growth provides reassurance amid persistent inflation pressures, and according to the Wall Street Journal, most economists remain optimistic about the near-term outlook.  

The Bad 

In an otherwise stellar report, the one potential red flag was the uptick in the unemployment rate to 4.0%—the highest level since January 2022. As seen in previous months, the increase was driven both by some workers losing their jobs as well as more individuals entering the labor force. However, listed job openings have declined faster than economists anticipated. The higher unemployment rate might indicate the Fed’s rate hikes are starting to have more of a cooling effect on the jobs market. Global chief strategist at Principal Asset Management, Seema Shah, told CNBC the May jobs report was “one step forward, two steps back”. Citing that not only has job growth exploded, but wages have also increased, both the opposite of what the Fed wants to see before cutting rates.  

The Unknown 

As stated by New York Times economic reporter Ben Casselman, “Sometimes, the many numbers included in the government’s monthly jobs report come together to paint a clear, coherent picture of the strength or weakness of the U.S. labor market. This is not one of those times.” The key question is what impact, if any, this report will have on the Federal Reserve’s deliberations around potential interest rate cuts later this year. If hot hiring and wages persist, it will likely force the Fed to leave its benchmark rate higher for longer to help restrain inflation. Conversely, if momentum begins fading in the months ahead, it could open the door to rate cuts by year-end. Before the release of the May report, markets had priced in over a 50% chance of a rate cut by September. However, the combination of robust hiring, accelerating wage growth and a higher unemployment rate muddy the outlook. 

Conclusion 

May’s jobs report delivered a counterintuitive picture of a red-hot labor market at a time when the Federal Reserve has been attempting to put on the brakes. The combination of soaring payrolls and revived wage pressures suggests demand for labor has yet to be tamed, even as overall economic growth is expected to downshift. However, the mixed signals in the data have left investors and economists alike scratching their heads over the Fed’s next policy moves. With their dual mandate of price stability and maximum employment, policymakers will be watching closely to determine if this job market strength is sustainable or if a more pronounced cooling is ahead. 

U.S. employers added 175,000 jobs in April, falling short of the 240,000 estimate. Consistent with recent trends, the healthcare and social assistance sectors saw the greatest increase with 56,000 and 31,000 jobs added respectively. Other industries with significant growth included transportation and warehousing, and retail. The unemployment rate increased slightly to 3.9%, despite expectations that it would remain steady at 3.8%. Year-over-year wage growth rose to 3.9%. 

The Numbers 

175,000: U.S. employers added 175,000 jobs in March.  

3.9%: The unemployment rate rose to 3.9%.  

3.9%: Wages rose 3.9% over the past year.  

The Good 

While job numbers fell short of expectations, the increase is still strong by historical standards. Many economists say the moderate pace of hiring, coupled with last month’s slowed wage growth, are just what the Federal Reserve hopes to see, after keeping interest rates at a two-decade high to fight persistently high inflation. The report was published just two days after the Fed voted to hold borrowing rates steady. Hourly earnings rose 0.2% from March and 3.9% over last year, both below estimates, alleviating concerns of wage growth-driven inflation. The New York Times reported strong labor participation, with women between the ages of 25 and 54—considered prime working years—reaching their highest participation rate ever, at 78%.  

The Bad 

Last month’s hiring was down significantly from the blockbuster increase of 315,000 in March and fell short of the 240,000 gain economists had predicted for April. The majority of job gains were seen within select industries—with healthcare accounting for a third of April’s job growth. As reported by the Wall Street Journal, slowed growth was particularly notable in the government, leisure and hospitality, and construction sectors. Consumers have begun reporting signs of a deteriorating job situation and are feeling less positive about the job market and are concerned about future business conditions, job availability and income, according to respondents of a recent Conference Board survey.  

The Unknown 

The April jobs data should help Fed officials regain confidence that inflation will drop to their target of 2%, but it’s going to take time. While Fed Chair Jerome Powell has said it’s unlikely rates will be raised further, the Wall Street Journal reported he has also indicated it will likely take more than a small increase in the unemployment rate—like that seen in April’s report—for the Fed to respond by lowering interest rates. Economists agree conditions could shift quickly, with the demand for workers already easing as job openings decline and fewer workers are voluntarily leaving their jobs.  

Conclusion 

The U.S. job market may be cooling as some experts have been anticipating for a while. While this could mean rate cuts will follow, the Fed has made it clear that one month of jobs data will have little impact on their decisions. Instead, officials will look at economic data in totality, keeping a close eye on the job market while maintaining their wait-and-see approach.