The numbers are in, and the labor market continues to tighten. In July’s Jobs Report, we saw an increase of 164,000 jobs for the month, well above economists’ estimate of 150,000 jobs. Over the last six months, job gains are averaging 141,000 per month. The unemployment rate also held steady at 3.7 percent, a near 50-year low. As a result, the labor market is continuing to strengthen month over month.
Americans are reentering the workforce
Discouraged workers in July amounted to 368,000 people, down 144,000 from last year. In other words, fewer Americans are discouraged from entering the workforce as they feel there are more opportunities available. Additionally, the number of long-term unemployed Americans substantially declined by 248,000 workers last month, accounting for just 19.2 percent of the total unemployed population.
The labor force participation rate as a whole was 63 percent in July, the highest rate since March 2018. However, this figure for prime-age participation worker (ages 25 to 54) was an impressive 82 percent. Thus, illustrating the vast majority of those who are years away from retiring are finding job opportunities.
However, an essential metric from this month’s report was a sharp decline in the broadest measure of unemployment. This metric comprises of those too discouraged to work as well as part-time workers seeking full-time employment. This measure fell to 7 percent – the lowest level since late 2000. Thus, fewer Americans are feeling defeated by the labor market.
Higher wages, more spending, and more savings
Average hourly earnings rose by $0.08 last month, for a total of $27.98, following another $0.08 gain in June. Over the past year, average hourly earnings have increased by 3.2 percent.
At the end of July, The Federal Reserve cut interest rates a quarter of a percent. After raising the interest rates for the first reduction since December 2008, Americans are finally receiving a break from escalating borrowing costs. Furthermore, the central bank “raised the federal funds rate nine times in three years, the highest yielding rates are now paying over 2.5%.”
This rate reduction is excellent news for any American worker looking to borrow money for their next big purchase or stash away some money in savings. Since workers are making more money and receiving favorable interest rate cuts, they have more discretionary income. As a result, Americans are spending more money and boosting their local economies, which is creating more jobs.
Job gains by industry
Professional and technical services saw a 31,000 job increase in July, which brings their 12-month total to 300,000 job gains. Approximately 33 percent of this growth this month came from computer systems design.
Healthcare employment rose by 30,000 this month, which has brought the 12-month total to a staggering 405,000 jobs added. Ambulatory healthcare accounts for two-thirds of this growth.
Social assistance has seen an increase of 143,000 jobs over the last 12 months and 20,000 gains alone in July. And employment in the financial activities industry rose by 18,000 in July, with insurance carriers leading the way.
Manufacturing showed signs of growth in July with 16,000 jobs added, which is slightly off from 2018’s average job gains of 22,000 per month.
Employment in other major industries, including construction, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government, changed little over the month. Mining did, however, see a decline in 5,000 jobs last month but demonstrating little change over previous months.
Jobs Report revisions
May and June job gains were revised down from 72,000 jobs to 62,000 jobs (-10,000) and from 224,000 to 193,000 (-31,000), respectively. The combined revisions over the last two months were -41,000 jobs. However, over the last three months, job gains have averaged 140,000 per month, indicating that the labor market is still steadily growing.
How can you navigate such a tight market?
With fewer Americans actively searching for new opportunities, it’s becoming more challenging to locate and recruit qualified workers for your vacant positions. In fact, in July alone, 370,000 Americans reentered the workforce, according to financial analyst Larry Kudlow.
So, with fewer civilians on the sideline waiting for a new job, you need someone on your sideline to help you tap into the elusive group of passive candidates. At JSG, we understand the market trends and take pride in knowing the ins and outs of your industry. Partner with one of our recruiters today and let’s help you fill your critical roles in this hot job market.