The Federal Reserve and every market analyst have been waiting for the job market to cool down a bit so that one of the last bastions of inflation could fall. The June employment picture was a bit cloudier for the first time this year. Though the headline job data again was just about 200,000, which is nothing to sneeze at —the underlying numbers were a bit weaker. For example, the previous two months of gains were revised downward by just over 100,000.
Even one number which showed strength could be interpreted as a weakness. The average hours worked per week was higher, indicating the demand continues. However, often employers expand overtime when they have the need and don’t want to hire additional personnel. Or perhaps they can’t find the workers. Wage inflation was still on the strong side, so this supports the latter theory.
These “cloudier” numbers made the July report released last Friday even more interesting. How did we do? The economy added 187,000 jobs in July, a decent number – but decidedly less than the average for the first half of the year. The previous two months of gains were revised down by approximately 50,000, making the overall numbers even lower. The headline unemployment rate moved down one tick to 3.5%. The all-important wage inflation numbers came in a bit high at 0.4% for the month and 4.4% annually. All-in-all, this was seen as a softer report, though wage growth will be concerning to the Fed. With no Fed meeting this month, there will be another jobs report before they meet in September.