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U.S. Jobs: July Yields Quirky Employment Outlook

It’s time for an “odd month out” as jobs added for July dips to 157,000 AND unemployment dips by 0.1 percent to 3.9 percent as well. To cushion that dip, numbers for May and June are both revised upward.

The latest employment figures are disappointing, but there's also good news.It’s the first Friday of August. Thus also, it’s time to download, digest, and interpret July 2018’s Employment Situation Summary from the U.S. Bureau of Labor Statistics. This time, we get a bit of a curve ball as, counterintuitively, both jobs creation and unemployment go down.


With only 157,000 jobs created for July, that’s off the mark considerably from the two previous months, both also revised upward in this latest report. May jumped to 248,000 jobs, and June to 268,000 jobs, so that even with a lackluster 157,000 jobs added in July, the three month average remains more than 200,000 at a still tolerable 224,000.


As Martha Gimbel, Director of Economic Research at observed — from a New York Times story this morning — this average monthly figure for May, June, and July handily improves over 2016’s average (181,000) and 2017’s number (184,000) by more than 20 percent.


Gimbel is quoted as saying, “It is amazing that at this point in a recovery you are seeing growth that is on average faster than the previous two years.” The slight 0.1 percent slide in unemployment is easily explained by a dip of 287,000 in the number of persons re-entering the workforce (a rise in which explained the preceding month’s equally slight jump to 4 percent).


Where The Growth Happened in July


July’s gainers include some steady member sectors, including a few seeming surprises (but not really, as I’ll explain). Professional and business services has been on a tear all year long. Up by 51,000 jobs in July, it’s also up by 518,000 for the preceding 12-month period (average: 43,000 jobs per month).


Manufacturing is still adding jobs (the consensus take is that the looming trade war, such as it is, hasn’t hit hard enough yet to negatively impact manufacturing). It gained 37,000 jobs for July, with a 325,000 gain for the preceding 12 months (average: 27,000 jobs per month). Together, these two sectors alone account for just over half of July’s gains.


Other winning sectors for the month include: health care and social assistance (another perennial evergreen), up by 34,000; food and beverage services, up by 26,000, construction, up by 19,000 (with a trailing 25,000 monthly average for the past 12 months, so down a bit from that number); and retail up just a hair at 7,000 jobs added.


The remaining sectors were all pretty much flat, including mining, wholesale trade, transportation and warehousing, information, financial activities, and government.


Also more or less flat: the still-stagant rate of wage growth. As with overall job growth, "maddeningly slow but steady expansion" remains the watchword here, as average hourly wages crept upward by $0.07 an hour to $27.05. That's in line with overall modest 2.7 percent growth over the past 12-month period.


Wage grow has slowly gained ground since turning around in 2014 and 2015.