Haver Analytics
Haver Analytics
USA
| Aug 02 2024

U.S. Employment & Earnings Growth Weaken in July; Jobless Rate Increases Again

Summary
  • Service sector weakness is notable.
  • Earnings disappoint m/m and trend growth continues to decelerate.
  • Jobless rate stays on upward path.

Nonfarm payrolls increased 114,000 (1.6% y/y) during July after rising 179,000 in June, revised from 206,000. During May, payrolls rose 216,000, revised from 218,000, while April payrolls rose an unrevised 108,000. Hurricane Beryl may have affected the July increase. Expectations had been for a 181,000 rise in the Action Economics Forecast Survey.

Average hourly earnings rose 0.2% in July following unrevised gains of 0.3% and 0.4% in the prior two months. The y/y earnings increase declined to 3.6% from 3.8% in June. The gain remained below the 5.9% high in March 2022 and was the weakest since May 2021.

The unemployment rate, measured in the household survey, rose to 4.3% in July from 4.1% in June. It was the highest rate since October 2021 after having reached a low of 3.4% in April of last year. An unchanged 4.1% rate had been expected. Household employment rose 67,000 after increasing 116,000 in June. The labor force increased 420,000 after a 277,000 June rise. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, rose to 7.8% from 7.6% in June. It was the highest rate since October 2021.

In the payroll survey, private-sector employment increased 97,000 (1.4% y/y) in July after rising 136,000 in June. Construction sector employment increased 25,000 (3.0% y/y) last month after rising 20,000 in June. Factory sector payrolls edged 1,000 higher (0.1% y/y), after declining 9,000 in June. Mining & logging sector jobs eased 1,000 (-1.8% y/y) after holding steady in June.

Private service-producing sector employment improved 72,000 in July (1.5% y/y) after a 125,000 June rise. Employment changes varied greatly amongst service sector categories. Education & health service jobs rose 57,000 (3.9% y/y) following a 79,000 June rise while leisure & hospitality employment rose 23,000 (1.5% y/y) after a 1,000 gain. Professional & business service jobs fell 1,000 (+0.6% y/y) after increasing 2,000 in June. Within that category, the number of temporary jobs declined 8,700 (-5.1% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment gained 22,000 (0.8% y/y) after rising 20,000 while financial activities jobs weakened 4,000 (+0.2% y/y) after a 10,000 improvement in June. Information sector employment rose fell 20,000 (-0.8% y/y) after increasing 1,000.

Government sector payrolls increased 17,000 last month (2.4% y/y) after a downwardly revised 43,000 June increase. Local government jobs rose 9,000 (2.4% y/y) after June’s rise of 25,000, while state government employment rose 7,000 (2.7% y/y) after a 16,000 gain. The number of federal government jobs edged 1,000 higher (2.3% y/y) following a 2,000 rise.

The 0.2% July rise in private-sector average hourly earnings reflected a 0.2% gain (4.5% y/y) in the goods-producing sector which followed a 0.4% improvement in June. Earnings in construction improved 0.4% (4.3% y/y) while factory sector earnings edged 0.1% higher (4.4% y/y). In the private services-sector, earnings rose 0.3% last month (3.4% y/y) after a 0.2% gain. Professional & business service sector earnings grew 0.3% (3.9% y/y) after two straight 0.4% increases. Leisure & hospitality earnings improved 0.2% (3.9% y/y) while information sector earnings strengthened 0.7% (3.4% y/y) after rising 0.4% in June. Financial sector earnings rose 0.4% (4.7% y/y) after holding steady. Private education & health services earnings improved 0.2% (3.1% y/y) after rising 0.3% in June. Trade, transportation and utilities pay inched up 0.1% (3.0% y/y) in July for a second straight month.

The length of the average workweek in the private sector eased to 34.2 hours in July after three months at 34.3 hours. The workweek in the goods-producing sector fell to 39.6 hours from 40.0 hours in June. The construction sector average workweek shortened to 38.8 hours from 39.4. The factory sector workweek fell to 39.9 hours from 40.1 while the average workweek in the private service sector was 33.2 hours for the fourth straight month.

In the household survey, the rise in the jobless rate to 4.3% occurred as employment rose slightly and the size of the labor force rose 0.2%. The labor force participation rate edged higher to 62.7%. The rate for teenagers declined sharply from 37.4 to 36.4%, while for individuals aged 20-24, it rose slightly to 71.3%. For rate for workers aged 25-54, the rate rose to 84.0%, the highest since 2001, and for workers 55 and over, it edged up to 38.3%.

The employment/population ratio for all workers slipped to 60.0% in July slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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