The Labor Department on Friday released its hiring and unemployment figures for July, providing a fresh snapshot of the American economy.The Numbersgross domestic product expanded at an annual rate of 4.1 percent in the second quarter, the fastest pace in nearly four years.Like weather forecasters predicting sunny skies in Southern California, economists have watched the…
The Labor Department on Friday released its hiring and unemployment figures for July, providing a fresh snapshot of the American economy.
gross domestic product expanded at an annual rate of 4.1 percent in the second quarter, the fastest pace in nearly four years.
Like weather forecasters predicting sunny skies in Southern California, economists have watched the labor market produce consistent monthly increases in hiring recently. “I’ve never seen such a steady stream of gains — there’s no volatility in the numbers,” said Ellen Zentner, chief United States economist at Morgan Stanley.
Although the overall gain for July came in slightly below expectations, figures for payroll increases in May and June were revised substantially higher. The Labor Department said the economy added 268,000 jobs in May, up from an initial estimate of 244,000, while the June gain was revised upward to 248,000 from 213,000.
Martha Gimbel, director of economic research at Indeed.com, noted before Friday’s report that in the first half of 2018, the average monthly increase in jobs had even exceeded those in the comparable periods of 2015 and 2016. (With revisions, it was 224,000, compared with 184,000 in the same period last year and 181,000 in 2016.) “It is amazing that at this point in a recovery you are seeing growth that is on average faster than the previous two years,” she said.
upgraded its view of the economy this week, substituting “strong” for “solid” in the statement that policymakers released after their latest meeting. The consensus on Wall Street calls for the central bank to raise rates twice more this year, in September and December.
Friday’s report confirms that trajectory, which would bring the benchmark rate to 2.25 to 2.5 percent by the end of the year. Although even that level is low by historical standards, the Fed’s slow but steady campaign to normalize interest rates after years near the zero bound is beginning to be felt.
Home buyers are encountering higher mortgage rates, one reason that the housing market has been faltering lately even as other economic indicators like hiring have remained strong, as evidenced by the upward revisions for May and June.
“We got enough upward revisions to offset the slight disappointment on the July number,” said Simona Mocuta, senior economist with State Street Global Advisors.
Ms. Mocuta added that the dip in the unemployment rate without any corresponding upward pressure on wages suggested more slack in the labor market than the unemployment rate might otherwise suggest.
“We are bringing unemployment way below 4.5 percent, which the Fed considers full employment,” she said. “But we are getting very modest wage inflation. This is an issue not just for the U.S., but in every other developed market.”