The Labor Department released its July jobs report which shows 157,000 jobs added to the U.S. economy, continuing the longest stretch of job growth in the nation’s history. The unemployment rate fell 0.1 percentage points to 3.9 percent from the previous month.
The Numbers
157,000: The economy added 157,000 jobs in July.
3.9%: The unemployment rate fell to 3.9 percent.
2.7%: Wages increased 2.7 percent over the last year.
The Good
The July jobs report shows continuing and steady job growth. Although the increase in jobs last month came in slightly below expectations, figures for payroll increases in May and June were revised substantially higher. The Labor Department reported that the economy added 268,000 jobs in May, up from an initial estimate of 244,000, while the June gain was revised upward to 248,000 from 213,000.
Healthy expansion continued in key sectors of the economy including manufacturing with an annual increase of 327,000 jobs and business and professional services, which grew by 518,000 positions in the last year.
The Bad
The 2.7 percent annual increase in wages reported in July is not significantly different from the wage growth figures over the last two years. While the burden of major salary increases has not yet directly impacted employers, wage stagnation can create challenges in employee retention. Wages have remained steady while the cost of living has increased for many Americans. For example, it is estimated that home prices are growing twice as fast as income growth. In the current job market, candidates can be reasonably confident that there will another job waiting for them if they leave their current position. Because research shows that money is the top motivator for employees to quit their jobs, there is significant urgency for employers to have sound recruitment and retention programs in place.
The Unknown
The recently imposed tariffs on U.S. trading partners does not yet appear to have affected the domestic job market. However, threats of an all-out trade war with China may force employers to rein in hiring projections. It has been estimated that trade with China supports as many as 2.6 million U.S. jobs, and a sharp and sudden decrease in trade with China could have a significant negative impact on the U.S. economy.
