US Jobs Gain Modest in July; Unemployment Rate Drops to 3.9%
News from S&P Global Market Intelligence
Hiring slowed in July, though the unemployment rate fell to 3.9%, as the U.S. economy continued to deliver solid performance despite concerns about ongoing trade tensions.
>>> Unemployment in July
Companies added 157,000 jobs in July, lower than a consensus estimate of 190,000 from Econoday, but pushing the unemployment rate down to 3.9% from 4% in June, the U.S. Labor Department said in its Aug. 3 report.
>>> Employment in July
Workers' average hourly earnings were up $0.07 in July, though wage growth was unchanged at 2.7% over the year, the report said.
U.S. markets opened up, with the S&P 500 index rising 0.7% to 2829.34. The dollar was down 0.02%, while yields on the 10-year Treasury dipped to 2.974%.
Despite the lower-than-expected July jobs numbers, June payrolls were revised upward from 213,000 to 248,000.
"Taking the revision into account ... this month's report is very solid despite the disappointing optics of the headline," Thomas Simons, senior economist at Jefferies LLC said in a note.
The unsurprising, but solid jobs report is likely to keep the U.S. Federal Reserve on its path of gradually increasing rates. The Fed's assessment of the economy at its Federal Open Market Committee this week was that growth was "strong," and that inflation remained near its target of 2%.
Markets expect the Fed to raise rates twice more this year, with the next rate hike anticipated in September.
"In terms of the outlook for employment, the fact that the economy is growing so strongly bodes well for ongoing job creation," ING chief economist James Knightley said in a note.
Though protectionism was still worrisome, tax cut stimulus "dwarfs the tax hit from higher tariffs," he wrote. "As such we are still expecting the US economy to expand 3% this year."
Solid growth could also give the administration of President Donald Trump more ammunition in its trade war with China, ING strategist Chris Turner said in a research note before the jobs report was released.
"U.S.-China trade relations are now the key focal point for global financial markets and with China ceding no ground right now, the U.S. will presumably look at raising the proposed tariff rate on the next $200 billion worth of Chinese imports to 25% from 10%," he wrote.
Trump had proposed the increase in tariffs this week, after already saying he was looking for tariffs against $500 billion in China imports, essentially the total value of goods imported to the U.S. from China.
In response, China said Aug. 3 it was planning to impose $60 billion in tariffs on imports if the U.S. carried through with its threats.« RETURN TO ALL NEWS