3 June 2020

July Jobs Report: Fewer New Jobs Than Expected, Lower Unemployment Than Expected

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The U.S. Bureau of Labor Statistics reported today that total nonfarm payroll employment increased by 162,000 in July, and the unemployment rate edged down to 7.4 percent. While the unemployment figures fell more than economists expected, forecasts called for a gain of 180,000 jobs in July, according to a survey by CNNMoney.

Employment rose in retail trade, food services and drinking places, financial activities, and wholesale trade.

The market reaction to the news was immediate with stock futures trending downward and bond yields falling. The yield on the 10-year Treasury note dropped to 2.61% from about 2.74% before the report.  The Federal Reserve has said that improvement in the job market could be a trigger for the central bank to begin removing the liquidity it has been pumping into the market.

With lower unemployment figures, there is some concern that the Fed’s bond-buying program could start to be curtailed as early as September. The Fed has said that improvement in job market data will be a trigger for the central bank to begin removing the liquidity it has been pumping into the market. The target to cease the program has been an unemployment rate of 7.0%.

Household Survey Data

Both the number of unemployed persons, at 11.5 million, and the unemployment rate, at 7.4 percent, edged down in July. Over the year, these measures were down by 1.2 million and 0.8 percentage point, respectively.

In July, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.2 million. These individuals accounted for 37.0 percent of the unemployed. The number of long-term unemployed has declined by 921,000 over the past year.

Establishment Survey Data

Total nonfarm payroll employment increased by 162,000 in July, with gains in retail trade, food services and drinking places, financial activities, and wholesale trade. Over the prior 12 months, nonfarm employment growth averaged 189,000 per month.

In July, average hourly earnings for all employees on private nonfarm payrolls edged down by 2 cents to $23.98, following a 10-cent increase in June. Over the year, average hourly earnings have risen by 44 cents, or 1.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees were unchanged at $20.14.

For the full report from the BLS, click here.  
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