I’ll go over the July payroll number but now understand we can throw it out the window with the prospect of the new tariffs. Tariff man is back and more dangerous than ever to our economy and that of the global one. No amount of Fed rate cuts will offset that. I would expect many businesses (that haven’t already) will be calling a time out on major spending decisions which will include hiring.
July payrolls grew by 164k, about as expected but the two prior months were revised down by 41k. But, the private sector was weaker than the July estimate. Private sector job adds totaled 148k vs the estimate of 165k and June was revised lower by 12k. The unemployment rate was unchanged at 3.7% as the labor force increase of 370k was almost offset by the 283k increase in the household survey. The all in U6 rate though fell to just 7% from 7.2%. I don’t have an explanation for this but there was a big drop in the household survey of those employed aged 25-54 and a big jump for those over the age of 55.
Manufacturing added 16k, well better than what ADP said (added 1k) but doesn’t square with any other manufacturing jobs data. Trade/transport added 3k after 14k in June and which followed 4 months in a row of declines. Education/health again added the most amount of jobs, 66k in July and the government added 16k.
Average hourly earnings was higher by 2.8%, the best in 3 months but average weekly earnings slowed to 2.6% as hours worked fell to 34.3 from 34.4. The participation rate ticked up by one tenth to 63% as did the employment to population ratio to 60.7%.
The bottom line is similar to what I said with ADP, job growth is slowing. The 3 month average is now 140k vs the 6 month average 141k, the 12 month average of 187k and the 2018 average of 223k. Whether this is because it’s getting harder finding qualified employees and/or employers are calling a time out on major hiring and expansion plans while global growth is slowing and tariffs are a wet blanket on economic activity. Again, no amount of rate cuts will fix this with the cost of money already so low.