2023-08-04 15:57:23
While demand remains strong in sectors such as leisure, hospitality and healthcare, wages in these sectors have actually increased somewhat less than before.
The US labor market was mixed in July. On the one hand, we see some loss of momentum in hiring, as 187,000 jobs were created in July after a downward revision of 186,000 in June (the initial figure was 209,000) . On the other hand, wage growth remains robust, at 4.4% year-on-year, and the unemployment rate fell from 3.6% to 3.5%.
Almost half of employment gains came from an increase in labor supply, while the participation rate remained at 62.6%. Gains and losses in hiring within industries were modest, with education (100,000) and health services (87,000) being the only notable gains. Temporary help services – a good indicator of overall economic performance – again saw a modest drop of 22,200. Interestingly, excluding non-supervisory employment, it seems that private sector companies have started to invest less in managerial employment (-69,000), as they might want to keep their lower-paid, higher-skilled workers in tight labor markets, while keeping an eye on costs.
A slowdown in hiring will likely be welcomed by central bankers, but for now, stubbornness in overall wage growth may be more important. While demand remains strong in sectors such as leisure, hospitality and healthcare, wages in these sectors have actually increased somewhat less than before. Ultimately, it’s a mixed bag that supports both a soft landing scenario and a possible mild recession at some point. For the Fed, however, this report appears to support its hawkish stance, but does not necessarily imply another hike in September.
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