The Jobs Report – July 2023

Highlight

The July employment report showed that the economy added 187K jobs during the month slightly below the consensus estimate of 200K. Downward revisions to the May and June reports totaled 49K. This brings the three-month average to 218K from 228K in June, continuing the trend of slowing growth in job gains. Private payrolls increased by 172K slightly less than consensus.

What you need to know:

• The household survey reported a gain of 268K for the month. The unemployment rate declined to 3.5% from 3.6% last month.
• As usual the service sector produced the majority of the monthly job gains adding 154K. Private education and health services accounted for 100K of the jobs. Goods producing sectors of the economy added only 18K in line with the weak readings lately on the manufacturing sector.
• Although the economy added jobs in July the average hours worked dropped by 0.1 from last month to 34.3. Workers’ pay increased 4.4% YOY matching last month’s gain.
• Temporary help services lost 22K in July after losing 20K in June. For the year this sector has lost 66K jobs. This is considered a leading indicator for the overall jobs market, so this weakness is concerning.
• Overall, July’s jobs report continues the trend of a moderating employment.  With inflation also coming down the Fed’s rate hikes are starting to bite. We expect these trends to continue, giving the Fed reasons to pause on further increases this fall.