About 114,000 jobs were added to the U.S. economy in July, as the unemployment rate increased to 4.3% and the number of unemployed people increased by 352,000 to 7.2 million, according to estimates from the U.S. Bureau of Labor Statistics.
The readings are lower than analysts expected – but may increase the likelihood of a Fed rate cut next month.
Employment continued to trend up in healthcare, in construction, and in transportation and warehousing, while information lost jobs.
The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.5 million. This measure is up from 1.2 million a year earlier.
The long-term unemployed accounted for 21.6% of all unemployed people in July.
The labor force participation rate was basically flat at 62.7%, as was the employment-population ratio, at 60.0%.
Wages increased slightly: The average hourly wage for all employees on private nonfarm payrolls increased by 8 cents, or 0.2%, to $35.07.
Over the past 12 months, average hourly earnings have increased by 3.6%.
In July, average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents, or 0.3%, to $30.14.
“July’s top line numbers, which came in below consensus expectations and included the highest unemployment rate since 2021, are likely going to intensify fears that a rate cut in September is too little, too late,” says Odeta Kushi, deputy chief economist for First American, in a statement. “On the flip side, the July jobs data increases the likelihood of a larger September rate cut, as odds of a 50bps rate cut in September now up to 70 percent and the 10-Year yield is now down to 3.85 percent.
“The decline in 10-Year Treasury means we can expect some downward pressure on mortgage rates, which will be music to the ears of home buyers,” Kushi says. “Housing is notoriously interest-rate sensitive and has been sluggish due to the affordability constraints caused by record-high house prices and mortgage rates in the high 6s.
“While lower mortgage rates will be welcome news for potential home buyers, we also want a resilient labor market,” she adds. “Home buyers need to feel confident about their jobs to make what is likely to be the biggest financial decision of their life.”
Photo: Saulo Mohana