Solid July Jobs Report Points to Momentum in Q3

Virginia Carson
August 5, 2018

The Labor Department said the economy added 268,000 jobs in May, up from an initial estimate of 244,000, while the June gain was revised upward to 248,000 from 213,000.

Thirty-seven percent of responding small business owners said they had job openings they could not fill, the highest number since the Monthly Jobs Report began, the NFIB said August 2.

July marked a solid month for the USA labor market according to the US Department of Commerce's Employment Report released this morning. Last week, the commerce department reported that GDP had grown at an annual rate of 4.1% in the second quarter, the fastest pace in almost four years. "Broadly speaking, large 0.3pp jumps in the unemployment rate like we saw in June are rare in expansions, and tend not be followed by further increases", Zentner said in a preview.

Among the unemployed, the number of people looking for work after losing or quitting their jobs fell by almost 290,000 to 1.8 million. As economic momentum continues, the labor force is still growing and unemployment is receding, resulting in a tick down in the unemployment rate and a rise in the employment-to-population ratio. That kept the annual increase in wages at 2.7% in July.

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One cloud on the horizon has been the Trump administration's trade fights with China, the European Union, Canada and Mexico. The unemployment rate for those without a high-school diploma fell to 5.1 per cent, the lowest on record.

"Small business owners are continuing to show that they're looking to hire and willing to pay more to hire the right employees", NFIB Chief Economist William C. Dunkelberg said. The Fed is unlikely to accelerate its rate hike plan if wages growth remains stagnant. The Federal Reserve is closely watching the wages component as it seeks to meet its 2 percent inflation target.

"If this was a prez [presidential election] year, these strong jobs reports would matter so much more for the elections", CNN election analyst Harry Enten said Friday on Twitter. About 37,000 were added in manufacturing, 34,000 in healthcare and 26,000 in food services. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June.

Employment also fell marginally in logging and mining, a sector that includes the oil industry, as well as in financial services, leisure and hospitality and in government.

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Construction boosted jobs by 19,000 following a 13,000 gain.

The slip in hiring last month may be temporary.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

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