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Employment Still Strong with 209,000 New Jobs in July

The U.S. economy continued a strong summer employment trend, adding 209,000 jobs in July following an increase of 231,000 new jobs in June (revised), according to the U.S. Department of Labor, Bureau of Labor Statistics Employment Situation report issued August 4 (Exhibit 1). This marks the 82nd consecutive month of job growth.exhibit 1

The unemployment rate was down slightly from 4.4% to 4.3% in July, which equals the lowest level in 16 years, and is considered to be at or near full employment (Exhibit 2).

The addition of 440,000 new jobs the past two months is a positive sign for the economy because it indicates that businesses are motivated to add new workers despite the increasing difficulty of finding qualified applicants.

exhibit
      2Initial jobless claims have remained at an extremely low level, with 240,000 claims the week ending August 3, according to the Department of Labor Unemployment Insurance Weekly Claims report (Exhibit 3). Jobless claims have remained under 300,000 for 127 consecutive weeks – the longest stretch since 1970.

In all, 1.97 million Americans are receiving unemployment benefits. That is little changed from last month and remains at about the lowest level since the mid-1970s. This is even more impressive considering the difference in the size of the labor force.exhibit

Here are some of the other key trends highlighted in the report: 

  • Average hourly earnings for all employees on private nonfarm payrolls rose by just $.09 to $26.36. Year-over-year, average hourly wages have risen by $.65, or 2.5% (Exhibit 4). Wages remain below pre-recession levels.
  • The number of long-term unemployed (those jobless for 27 weeks or more) edged up by 0.1 million to 1.8 million and accounted for 25.9% of the unemployed (Exhibit 5). Year-over-year, the number of long-term unemployed exhibit 4was down by 225,000, but still remains at an elevated level.
  • The labor force participation rate improved by 0.1% to 62.9%, as did the employment-population ratio, which was reported at 60.2 in July. Both figures are little changed over the course of this year.
  • The labor force participation rate for those in their prime working years (age 25-54) continues to hold steady at 81.5%, which is about 1.5% below the pre-recession level (Exhibit 6). This continues to be a weakness in the employment recovery.exhibit 5
  • The number of persons employed part time for economic reasons, at 5.3 million, was unchanged (Exhibit 7).
  • The average workweek for all employees on private nonfarm payrolls was also unchanged at 34.5 hours in July (Exhibit 8).

Strong job growth the past two months is a good sign for the economy. With unemployment at about 4.3%, the continuing job growth trend shows that exhibit 6businesses are looking to expand further. While wage growth remains disappointing, if job growth continues, competition for qualified employees may help drive up wages at a faster pace. That would be a positive for the overall economy, although it could lead to a slight increase in inflation growth.
exhibits 7 & 8

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