Job Growth Slowed Significantly in July, while the Unemployment Rate Climbed to 4.3%
The July Labor Market Report showed significantly lower-than-expected job growth and the highest unemployment rate since 2021. Stocks plummeted as financial markets were panicked due to fears that the economy was weakening. While some economists state that the Sahm Rule has been triggered, indicating a recession has started (happens when the three-month moving average of the U.S. unemployment rate is 0.5 percentage points or more above its lowest during the previous 12 months), others say there’s no need to panic.
The rising unemployment rate owes more to an increase in eligible workers than to a reduced number of people with jobs. Other bright spots to consider are that the unemployment rate remains historically low, job losses were primarily in the information sector, and most layoffs were listed as temporary. The Fed’s Chairman Powell stated that the job market has moved “from overheated conditions to more normal conditions.”
- The jobs market is cooling. The U.S. economy added a lower-than-expected 114,000 jobs in July, while the unemployment rate increased to its highest level since October 2021.
- The prime-aged worker (ages 25-54) participation rate rose to 84%, its highest level since 2001, impacting the unemployment rate.
The Numbers*:
The U.S. economy added 114,000 jobs in July. Gains were significantly lower than the Dow Jones estimate of +185,000 jobs and far below the average monthly gain of +215,000 jobs over the past 12 months.
The unemployment rate rose by 0.2 percentage points in July to 4.3%, and the number of unemployed people increased by 352,000 to 7.2 million. These measures are higher than a year ago when the jobless rate was 3.5 percent, and the number of unemployed people was 5.9 million. Among the unemployed, the number of people on temporary layoff increased by 249,000 to 1.1 million in July.
There were 8.2M open jobs on the last working day of June.
The labor force participation rate changed little in July to 62.7%, and there was also little change over the year. The number of long-term unemployed (those jobless for 27+ weeks) remained at 1.5 million, up from 1.2 million a year ago. The number of people employed part-time for economic reasons (those unable to find full-time work or had their hours reduced) rose significantly (+346,000) to 4.6M. Those not in the labor force but wanting a job rose 366,000 to 5.6M.
- Average hourly earnings increased by 8 cents, or 0.2%, to $35.07.
- Over the last 12 months, average hourly earnings have increased by 3.6%.
- Average weekly hours worked dropped slightly to 34.2 hours per week.
- In manufacturing, the average work week was also down to 39.9 hours.
- Total hires were 5.3M, while total separations were 5.1M.
- Within separations, quits and layoffs/discharges were down to 3.3M and 1.5M respectively.
Open jobs for May were revised down by 2,000 to +216,000, and June was further revised down by 27,000 to +179,000.
Industry Trends:
| Industry | July Gains | Notes |
| Health care | +55,000 | Primarily in home health care services (+22,000), hospitals (+20,000), and nursing and residential care facilities (+9,000). |
| Construction | +25,000 | Up from the 12-month average of 19,000 jobs per month. |
| Leisure and hospitality | +23,000 | |
| Government | +17,000 | |
| Transportation and warehousing | +14,000 | |
| Social assistance | +9,000 | Far below the monthly average of +23,000 over the last 12 months. |
Worker groups:
The unemployment rate for adult men increased to 4%. The unemployment rate increased slightly to 3.8 % for adult women. Teenagers’ rate of unemployment increased to 12.4%.
Get latest Jobs Report:
* Above represents July 2024 Data
Sources:
- https://abcnews.go.com/Business/recession-fears-loom-economy-time/story?id=112588104
- https://www.axios.com/2024/08/02/jobs-report-july-2024-unemployment-economy
- https://www.bls.gov/news.release/jolts.nr0.htm
- https://www.bls.gov/news.release/pdf/empsit.pdf
- https://www.cnbc.com/2024/08/05/here-are-all-the-reasons-why-mondays-major-market-wreck-is-happening.html?recirc=taboolainternal
- https://www.cnn.com/2024/08/03/economy/what-julys-weaker-than-expected-jobs-report-means/index.html
- https://www.cnn.com/business/live-news/us-jobs-report-july-markets/index.html
- https://www.federalreserve.gov/monetarypolicy/beigebook202405.htm
- https://www.forbes.com/sites/jackkelly/2024/08/02/dow-plummets-nearly-1000-points-how-the-stock-market-plunge-could-impact-the-job-market/
- https://www.foxbusiness.com/economy/us-jobs-report-july-2024
- https://www.jpmorgan.com/insights/outlook/economic-outlook/jobs-report-july-2024#:~:text=even%20more%20likely.-,A%20softer%20labor%20market,May%20by%202%2C000%20to%20216%2C000
- https://www.reuters.com/markets/us/four-reasons-take-breath-after-us-jobs-report-2024-08-02/
- https://finance.yahoo.com/news/july-jobs-report-unemployment-rate-jumps-to-43-job-gains-total-just-114000-as-labor-slowdown-deepens-190219766.html
