Employment Situation: Revisions Keep Trend Higher Despite Headline Miss
August 3, 2018
Bottom Line: While July's jobs gains were less than expected, the overall report showed continued moderate improvement in labor markets. The tally of teacher jobs, always volatile this time of year, fell, contributing to losses in both the private and public sectors that are likely temporary. Additionally, there were losses in the hobby and toy segment of retail that were likely one-time and related to a major bankruptcy. The household employment survey grew sharply, pushing the unemployment rate back down below 4%. Hourly earnings were a touch lower than expected and saw negative revisions -- however, on a trend basis there has been a slight acceleration in average hourly earnings with the last 3 months running at a faster pace of gains than the last 6- and 12-months. Overall, despite reports of labor shortages, job growth is accelerating modestly with wage gains that are still below cycle highs but accelerating slightly.
Payroll Employment rose by 157k in July, compared with market expectations for an increase of 193k. The prior 2 months were revised, higher in June by 35k and higher in May by 24k.
Government jobs FELL by 13k. Consequently, private sector jobs ROSE by 170k. Private education jobs fell by 11k. State and Local education jobs fell by -10k.
Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,400k jobs have been created.
In July, the job gains were in
- Trade, Transportation & Utilities (+8k with 7k of those in Retail Trade),
- Professional & Business Services (+51k with the addition of 27.9k in Temp Help Services),
- Leisure & Hospitality (+40k),
- Manufacturing (+37k),
- Education & Health Services (+34k),
- Construction (+19k), and
- Financial Activities (-5k).
- Jobs were shed in Financial Activities (-5k), and Government (-13k).
Article by
Contingent Macro Advisors