Labor Department Spills the Beans on July’s Job Data
Construction Boom in Certain States Brings More Jobs
Hold on to your hard hats, folks—if you’re in Arizona, California, Florida, or Texas, at least construction’s got your back covered with new jobs.
Meanwhile, in the land of the statistically inclined, the latest job report is here to lovingly slap us awake from our summer reverie. According to the Labor Department, a glorious 114,000 jobs were added in July. Yes, folks, that’s right, we missed the mark by a sweltering 61,000! Economists had forecast a gain of 175,000 jobs, by the way. And oh, sweet cherry on top, the unemployment rate decided to pull a prank by rising to 4.3% instead of chilling at the expected 4.1%.
For those who keep track of these charming little bits of information, this is the highest our friend the jobless rate has soared since October 2021.
“Temperatures might be hot around the country, but there’s no summer heatwave for the job market,” said Becky Frankiewicz, president of ManPowerGroup North America. “With across-the-board cooling, we have lost most of the gains we saw from the first quarter of the year.”
THE US HOUSING MARKET IS ‘STUCK,’ AND MIGHT REMAIN THAT WAY UNTIL 2026
Friday’s report throws yet another log on the bonfire of evidence suggesting the economy is tiptoeing around the edges of a slowdown. Inflation’s devilish dance and sky-high interest rates are clearly doing a number on everyone. Wall Street’s reaction? Unhappy. Dow futures crumbled faster than overpriced artisanal cookies, shedding more than 500 points.
Unemployment wasn’t done being a drama queen. Its rise triggered the so-called Sahm Rule, an indicator known for its talent for spotting early signs of recessions. According to the sagely Sahm Rule, when the three-month moving average of the jobless rate is a half-point higher than its 12-month low, you better believe a recession is knocking at the door.
For those obsessed with numbers: Our average unemployment rate over the past three months was 4.13%, a charming 0.63 percentage points higher than the 3.5% rate recorded in July 2023. The Sahm Rule has a spotless track record, predicting every recession since 1970. So, you know, no pressure or anything.
“The latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession,” opined Jeffrey Roach, chief economist at LPL Financial. “However, early warning signs suggest further weakness.” Talk about comforting words to live by.
In addition to this financial teeter-totter, questions arise—like angsty teenagers—about whether the Federal Reserve has dragged its feet for too long on cutting interest rates. After its recent pow-wow, the Fed decided to keep rates steady at their 23-year high but hinted they might start loosening policy come September.
Well, investors seem to think a rate cut isn’t just likely—it’s practically a done deal. Odds are favoring a 50-basis point cut in September as the job growth picture gets cloudier than a London afternoon.
A construction worker is seen in Raleigh, North Carolina, on July 17. (Allison Joyce/Bloomberg via Getty Images / Getty Images)
“The labor market’s slowdown is now materializing with more clarity,” stated Seema Shah, chief global strategist at Principal Asset Management. “Job gains have dropped below the 150,000 threshold that would be considered consistent with a solid economy… A September rate cut is in the bag and the Fed will be hoping that they haven’t, once again, been too slow to act.”
The healthcare sector decided to be the overachiever here, blessing us with 55,000 new jobs in July. Other sectors, namely construction (25,000), government (17,000), and transportation and warehousing (14,000) also showed some love with notable growth.
But let’s not get carried away with the feel-good moments. We had some noticeable job losses as well. Information employment declined by a juicy 20,000, and financial activities weren’t too far behind, shedding 4,000 employees.
Oh, and let’s not forget the modest revisions: June’s job gains were dialed down by 27,000 to a total of 179,000. May, not wanting to be left out, also revised slightly lower to 216,000 jobs. Some numbers, like bad news, just always find a way to get worse over time.
