U.S. Job Growth Slowed In July; Wage Growth Remains Modest
NEW YORK (CBSNews) - Businesses hired a relatively modest 157,000 workers in July as the nation's unemployment rate ticked down to 3.9 percent, the Labor Department reported on Friday. The figures, while below most economists' expectations, reflects an economy still expanding at a healthy rate.
Hiring in May and June was even stronger than previously reported, with 268,000 and 248,000 jobs added, respectively, according to revised numbers for those months from the Labor Department. This year, the economy has added an average of 215,000 jobs a month.
"Average job growth so far this year is still higher than in 2016 and 2017, which is astonishing at this point in a recovery," noted Martha Gimbel, director of economic research for the job search site Indeed.
The economy expanded at a 4.1 percent annual rate in the April-to-June quarter, the strongest showing in nearly four years.
Mark Zandi, chief economist at Moody's Analytics, said that employer data from payroll processor ADP showed that very large multinational companies actually cut jobs in July. That may reflect tariff concerns, he said, though it could also be a blip.
Moody's helps compile ADP's monthly jobs report, which was released Wednesday and showed that companies hired 219,000 new workers last month.
Typically, when the unemployment rate falls as low as it is now, businesses raise wages more rapidly to attract and keep workers. But average hourly pay has been rising very slowly. It increased 2.7 percent in July from a year earlier, the same annual pace as the two prior months.
That's far from the 3.5 percent to 4 percent growth that occurred during previous periods when the jobless rate has been this low.
And inflation has lately picked up, reaching 2.9 percent in June from a year earlier. That means that adjusted for rising prices, average hourly pay has declined a bit this year.
"Clearly, employers are still not feeling pressure from a tightening labor market to increase wages," wrote Valerie Wilson, director of the Program on Race, Ethnicity, and the Economy at the Economic Policy Institute, in a blog post. "As the economy continues to advance towards full employment we should start seeing stronger wage growth across the economy, but given the lack of such growth, the low unemployment rate looks to be overstating the strength of the labor market."
Despite the modest wage numbers, most economists expect the Federal Reserve to raise interest rates twice more this year.
"Unemployment has steadily remained below what we'd consider to be full employment levels and the Fed hit its inflation target of 2% last month, so continuing to raise interest rates is still very much necessary," Steve Rick, chief economist at CUNA Mutual Group, wrote in a note.
-- The Associated Press contributed reporting
© 2018 CBS Interactive Inc.. All Rights Reserved.
