by Calculated Risk on 8/04/2023 09:20:00 AM

The headline jobs number in the July employment report was slightly below expectations, however, employment for the previous two months was revised down by 49,000, combined.  The participation rate was unchanged, and the employment population ratio increased slightly, and the unemployment rate decreased to 3.5%.

Leisure and hospitality gained 17 thousand jobs in July.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 352 thousand jobs since February 2020.  So, leisure and hospitality has now added back about 96% all of the jobs lost in March and April 2020. 

Construction employment increased 19 thousand and is now 363 thousand above the pre-pandemic level. 

Manufacturing employment decreased 2 thousand jobs and is now 200 thousand above the pre-pandemic level.

Earlier: July Employment Report: 187 thousand Jobs, 3.5% Unemployment Rate

In July, the year-over-year employment change was 3.36 million jobs.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate decreased in July to 83.4% from 83.5% in June, and the 25 to 54 employment population ratio was unchanged at 80.9% from 80.9% the previous month.

Both are above the pre-pandemic levels and suggest all of the prime age workers have returned to the labor force.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.4% YoY in July. 

Part Time for Economic Reasons

From the BLS report:

"The number of persons employed part time for economic reasons, at 4.0 million, changed little in July. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in July to 4.00 million from 4.19 million in June. This is below pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 6.7% from 6.9% in the previous month. This is down from the record high in April 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is below the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.164 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.105 million the previous month.

This is at pre-pandemic levels.

Summary:

The headline monthly jobs number was slightly below consensus expectations; however, May and June payrolls were revised down by 49,000 combined.

Job growth has slowed to a somewhat more normal pace, up at a 2.7 million annual rate over the last 6 months.  Overall, this was another solid employment report.