US UNEMPLOYMENT Jobless rate slips as hiring slows
Employers pulled back on hiring in July, but the job gains were still enough to lower the U.S. unemployment rate a tick to 3.9 percent from 4 percent.
Employers added 157,000 jobs last month, a modest gain, the Labor Department said Friday. That’s below the 215,000 average for the first seven months this year, but economists said the decline will likely prove temporary.
Consumers are spending freely and businesses are stepping up their investment in buildings and equipment, accelerating growth. That’s raising demand for workers in industries ranging from manufacturing to construction to health care. The economy expanded at a 4.1 percent annual rate in the April-June quarter, the strongest showing in nearly four years.
The smaller job gain likely reflected some one-time factors, analysts said. Local governments cut 20,000 jobs, the most in more than two years. Most were in education, suggesting some of the decline reflects the start of summer school holidays.
Sporting goods, hobby and toy stores shed 32,000 jobs, the most on records dating back to 1990, as a result of the Toys R Us bankruptcy, economists said.
Excluding those factors, hiring in July would have been closer to the monthly average this year.
The government also revised hiring totals for May and June to show another 59,000 jobs were added in those months.
The economy is entering its 10th year of expansion, and hiring accelerated compared with 2017, surprising most analysts.
Average hourly-pay gains remained modest, increasing 2.7 percent from a year earlier, the same as the previous two months. That has puzzled Federal Reserve Chairman Jerome Powell and many economists. Typically, when unemployment has fallen below 4 percent in the past, wages have increased at a faster pace.
With rising gas prices pushing up inflation, Americans saw their inflation-adjusted pay decrease in the past year. Consumer prices rose 2.9 percent in June from a year earlier, more than the average wage gain.
One cloud on the horizon: the Trump administration’s trade fights with China, the European Union, Canada and Mexico. Yet that didn’t appear to impact hiring last month.
Manufacturers, among the most directly affected by import taxes, added 37,000 jobs, the most in seven months, likely due to oil and gas drillers nearly doubling their investment in rigs and other structures this spring. That’s boosted factory output of steel pipe and other equipment. The new spending follows a 60 percent jump in oil prices in the past year.
Companies say they are struggling to find workers, with openings higher than the number of unemployed for the first time in decades.
In response, many firms appear to be giving part-time workers longer hours. The number of part-time workers preferring full-time work has fallen nearly 13 percent in the past year and stands at 4.6 million – the fewest in 11 years.
The underemployment rate – which includes discouraged workers no longer searching for work and involuntary part-time workers – dropped from 7.8 to 7.5 percent, the lowest in 17 years.
The unemployment rate for those without a high-school diploma fell to 5.1 percent, the lowest on record.
The economy is projected to grow at about a 3 percent pace for the rest of the year, which would likely mean growth for all of 2018 would top 3 percent for the first time since 2005.