The Labor Department releases its monthly report card on the job market Friday morning. While rising interest rates have been a drag on some parts of the economy, overall hiring remains strong.
A MARTÍNEZ, HOST:
Hiring held steady last month as U.S. employers added 187,000 jobs in July. That’s roughly in line with what forecasters had expected. The Labor Department says hiring has slowed since the beginning of the year, but employers are still adding more than enough jobs every month to keep the unemployment rate near a 50-year low. For more on this, we’re joined by NPR’s Scott Horsley. Scott, what did that report show today?
SCOTT HORSLEY, BYLINE: A, we continue to see steady, if not spectacular, job growth. There is some indication the heat wave that’s plagued much of the country in recent weeks might be weighing on some kinds of jobs, like outdoor restaurants, for example. Hiring in bars and restaurants was pretty subdued last month. And Homebase, which makes scheduling software that a lot of restaurants use, says it did see a sharper drop in traffic in places like Birmingham and San Antonio and Phoenix where it’s been really hot in recent weeks. We also saw a small loss of jobs in manufacturing, a sector that’s sensitive to rising interest rates. But overall, the job market has not cooled off very much. There’s still a lot of job openings. Layoffs remain pretty rare. Worries about a recession have receded somewhat, and you’re starting to hear more optimistic talk about prospects of a soft landing.
MARTÍNEZ: What about wages? Are they still going up?
HORSLEY: Yeah, wages are still climbing, although not as fast as they had been. Average wages for the 12 months ending in July were up 4.4%. That’s similar to what we saw in June. The good news is inflation has also cooled off a bit. It was 3% in June. So economist Nick Bunker, who’s with the Indeed job search website, says even with these smaller pay raises, workers are finally coming out ahead.
NICK BUNKER: There are some signs that employers need to dole out fewer raises to retain workers or hire new workers. But at the same time, prices are slowing down. So workers are seeing more purchasing power for every hour that they work.
HORSLEY: And we’ll find out if that purchasing power bump continued in July next week when we get the monthly inflation data.
MARTÍNEZ: I mentioned earlier how unemployment’s rate, at least, is on near a 50-year low. Is that going to continue?
HORSLEY: Yeah, the unemployment rate dipped in July to 3.5% from 3.6% the month before. It’s been hovering in a pretty narrow range now for more than a year. The unemployment rate for African Americans also fell last month to 5.8% after climbing in the two previous months. Now, the sample size there is pretty small, so the number bounces around a lot, but that’s encouraging. Another encouraging data point – we’ve seen more people coming into the workforce in recent months, especially those in their prime working years between 25 and 54. The share of people in that age group who are either working or looking for work is near a two-decade high. And the reason that matters is the more people who are in the workforce, the more the economy can grow without putting upward pressure on inflation.
MARTÍNEZ: Anything else stick out from the jobs report?
HORSLEY: You know, this is a jobs report, but it also has some interesting information about people who are taking time off from work. Economist Bunker notes July’s traditionally a peak month for workers to take vacation. That’s a pattern that was disrupted during the pandemic when a lot of people were nervous about traveling. But Bunker says we saw an uptick last month in the number of people who had jobs but told the Labor Department they were taking time off.
BUNKER: Which I think would be one sign of sort of the normalization of life in the U.S. post-COVID. But also it would be a sign that demand for travel, leisure, hospitality was relatively strong in July.
HORSLEY: And that’s an industry that has seen a lot of hiring in recent years but is still not quite back to where it was before the pandemic.
MARTÍNEZ: NPR’s Scott Horsley. Thanks, Scott.
HORSLEY: You’re welcome.
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