US Unemployment Drops Slightly; Job Growth Slows

Ann Santiago
August 5, 2018

US hiring cooled in July after more-robust gains than previously reported, while the unemployment rate slipped back below 4 percent and wage increases remained subdued, reinforcing a picture of steady labor-market growth in line with the Federal Reserve's outlook for gradual interest-rate hikes. The unemployment rate slipped to 3.9 percent, from 4 percent, the Labor Department said Friday.

Unemployment has fallen this year to its lowest level since 2000, and many economists predict unemployment will fall even further this year.

The Federal Reserve upgraded its view of the economy this week, substituting "strong" for "solid" in the statement that policymakers released after their latest meeting. Manufacturers, among the most directly affected by the import taxes, added 37,000 jobs, the most in seven months. "I don't see today's number as a disappointment: 157,000 job gains is still impressive, given where we are in the business cycle".

The somewhat disappointing result for the month obscures the very strong pace over the last three months, even as employers nationwide continue to complain about difficulty finding workers to fill open positions. Hiring in dentists' offices was relatively flat, adding only 200 jobs last month.


The Fed's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding the volatile food and energy components, increased 1.9 percent in June. The economy is now entering its tenth year of expansion, and hiring has actually accelerated this year compared with 2017, surprising most analysts. "This is an issue not just for the USA, but in every other developed market".

President Donald Trump's administration has imposed duties on steel and aluminum imports, provoking retaliation by the United States' trade partners, including China, Canada, Mexico and the European Union. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June.

Excluding those factors, hiring in July would have been closer to the monthly average this year. Mining employment registered its first decline in 10 months in July (-4,000) but is likely to bounce back with higher energy prices propelling activity in the sector. The views expressed in this column are the author's own and do not reflect those of Berenberg Capital Markets, LLC. This article is strictly for informational purposes only. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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