Employment Near Record Low but Job Rate is Slowing

US payrolls saw a healthy bump in July, with wage gains indicating a strong labor market as we head into this week’s interest-rate cut from the Federal Reserve. According to the United States Department of Labor, employment is up 164,000 this week—nearly meeting projections—but that also comes after two months that have been revised down. Still, the jobless rate maintained a near-half-century low near 3.7 percent with hour wage earnings climbing 3.2 percent from last year; which is better than had been anticipated. 

However, even though July indicated strong payroll figures, the 140,000 three-month average was the slowest growth rate in two years.  That trend was somewhat consistent with a forecast of gradual slowdown in the labor market, also suggesting that the US economy is slowing overall. 

Indeed, report revisions subtracted 41,000 jobs from the two months prior. This lowered the June figure from 224,000 to a shocking 193,000. 

Now, investors had actually anticipated such reductions might come as a result of Trump’s most recent trade efforts, which do not appear to be repairing the trade relationship with China.  As such, the Fed had initially signaled their estimated quarter-point interest-rate cut could initiate soon, but it would not do much to ease the tension.  

Accordingly, traders made marginal adjustments to the amount of easing the hope to get from the US central bank, so far this year.  This helped to hold the 10-year Treasury yield at roughly 1.88 percent, with a [Bloomberg] dollar index up not even 0.1 percent. 

But there is more to this story:  the average workweek also got shorter at the same time that these other figures reduced. And a shorter work week also effects hourly pay, of course.  That in mind, the average private employment workweek dropped to 34.3 hours, down only from 34.4 hours.  Now, the manufacturing sector did add 16,000 jobs but that was much lower than expected, as overall working hours have cutback.  As a matter of fact, the manufacturing workweek, in July, dropped to its shortest measure since November 2011.