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Economy in Brief

U.S. Job Market Improves Broadly During July
by Tom Moeller  August 5, 2022

• Payroll employment increase accelerates to 528,000.

• Wage gain remains firm at 5.2% y/y.

• Unemployment rate returns to 50-year low.

The 528,000 gain in nonfarm payrolls last month (4.0% y/y) followed increases of 398,000 and 386,000 during the prior two months. It was the largest monthly increase since February and was double the expectation for a 250,000 rise in the Action Economics Forecast Survey. The increases during June and May were revised up slightly from 372,000 and 384,000.

Average hourly earnings rose 0.5% last month, up from 0.4% in both June and May. It was the strongest gain since March. The 5.2% y/y rise was increased from 4.9% growth last year. A 0.3% monthly gain had been expected.

Job strength lowered the unemployment rate in July to 3.5%, where it had last been in February 2020. The rate was forecasted to be 3.6%. Household employment rose 179,000 following declines in two of the prior three months. The labor force fell 63,000, the third decline in four months. The overall unemployment rate, including workers who are marginally attached & part-time for economic reasons, held steady at 6.7%.

In the establishment survey, job strength was broad-based. Factory sector employment rose 30,000 last month (3.8% y/y) following a 27,000 June increase. Construction sector employment gained 32,000 (4.2% y/y), double the June increase. Mining & logging employment rose 7,000 (11.3% y/y), about the same as in the prior three months.

Private service-producing sector employment strengthened 402,000 (4.6% y/y), the strongest increase since February. Education & health care jobs rose 122,000 (3.3% y/y) after increasing 109,000 in June. Leisure & hospitality employment rose 96,000 (8.7% y/y) following a 74,000 increase. Professional and business services employment rose 89,000 (5.2% y/y) about the same as in June as temporary workers rose 9,800 (7.8% y/y) following a 4,300 June rise. Employment in trade, transportation & utilities rose 54,000 (3.5% y/y) as retail jobs increased a steady 21,600 (2.4% y/y). Information sector employment rose 13,000 (6.3% y/y) after increasing 24,000 in June. Financial services employment also rose 13,000 (2.2% y/y) after a 6,000 June rise.

Government sector payrolls increased 57,000 (0.8% y/y) after falling 6,000 in June. Federal government payrolls rose 10,000 (-0.5% y/y) last month. State government employment rose 10,000 (0.7% y/y) after falling 8,000 but local government jobs surged 37,000 (1.1% y/y).

Private-sector average hourly earnings rose 0.5% after a 0.4% June gain, revised from 0.3%. The y/y increase slowed to 5.2% from a 5.6% high in March. Earnings in the goods-producing sector rose 0.3% after a 0.2% gain and the 4.5% y/y rise is down from a 5.2% March high. Earnings in construction rose 5.5% y/y followed by 3.9% y/y in the factory sector. In the services-producing sectors, earnings rose 0.5% (5.4% y/y) following a similar rise in June. Leisure & hospitality earnings have risen 8.7% y/y and professional & business sector earnings increased 5.9%. Information sector pay rose 4.4% y/y followed by a 4.0% y/y rise in financial activities.

The average workweek held at 34.6 hours in July for the sixth month this year. The workweek in goods-producing sectors improved to 40.0 hours and recovered a June decline. The average workweek in service-producing sectors stood at 33.5 hours where it's been for four months, but it remained below the 33.9 hour high in early-2021. The aggregate hours index, a key indicator of production and income, rose 0.4% (4.1% y/y) in July.

The household survey also exhibited labor market strength with the unemployment rate easing to 3.5% from 3.6%. The labor force participation rate dipped to 62.1%, below its 62.4% March high. The rate teenagers rose to 35.8%. For workers aged 20-24, the rate eased to 71.1% but for workers age 25-54, it rose to 82.4%, up from 81.9% twelve month earlier. For individuals 55 and over, the rate rose to 38.7%, up from 38.4% twelve months earlier.

The employment/population ratio for all workers edged up to 60.0% in July, up from 58.4% in July of last year. It remained below its reading of 61.2% in February 2020 just prior to the pandemic. The level for those 16 and over was steady at 71.7%, up from 70.0% last July.

The average duration of unemployment fell to 22.1 from 22.3 weeks while the median duration of unemployment declined to 8.5 weeks, down from 14.4 weeks twelve months earlier.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

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