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Job Growth Continues the Longest Streak of Employment Gains Recorded, Weekly Earnings Climb

CoStar Market Insights: US Employers Added 157,000 Net New Jobs in July, the Nation’s 94th Month of Uninterrupted Jobs Gains
August 3, 2018
Employers added 157,000 net new jobs in July, the nation’s 94th consecutive month of jobs gains, according to Friday’s national employment report released by the Labor Dept.

Although July's jobs report was weaker than analysts expected, both May and June job numbers were revised upwards by 59,000, bringing the three-month average job gain to 224,000 per month. About 18.7 million jobs have been added since October 2010, a monthly average of 199,000.

The unemployment rate ticked down to 3.9 percent after increasing in June due to an expansion of the labor force, as more new workers are now being absorbed into the workforce.

There were few surprises in the distribution of job gains by sector. The large professional and business services sector added 51,000 positions, including 15,900 professional and technical services jobs, and 34,900 jobs were added in administrative and waste services, the majority of which were temporary positions.

Health services added 33,500 positions, of which about half were in hospitals and medical offices, and half in social assistance, such as in-home elderly care.

About 37,000 jobs were added in the manufacturing sector, most of which were in durable goods industries, including fabricated metal products, machinery and transportation equipment.

These manufacturing industries are more exposed than others to the tariffs on aluminum and steel imports imposed in June of this year, but recent heightened trade frictions are a risk to the supply chains and cost structures of many industries, including agriculture and food production.

Leisure and hospitality added 40,000 jobs, with 26,200 in food services and drinking establishments, as the experiential retail segment of the consumer market continues to grow.

The labor participation rate remained flat overall at 62.9 percent, but the rate for prime-aged workers (those between the ages of 25 and 54) continued to climb. That the labor participation rate remains far below pre-recession levels indicates that there may be many more potential workers waiting on the sidelines, even now.

Wage growth, which has been persistently weak over this expansion period, has begun showing some signs of life. Growth in average weekly earnings over a year ago (combining hourly wages with the hours worked per week) remained unchanged from June at 3 percent. This indicator shows a lot of monthly volatility, but the six-month moving average has shown steady improvement since January 2017. And at 3 percent, it is now faster than in any month since March 2011.

While this rate is slower than might be expected during a tight labor market, it still exceeds the rate of inflation, meaning that real weekly wages are on the rise.

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