Executive Summary:
Yes, payroll employment rose less than expected in July, and, yes, revisions pegged it lower than initially thought during May and June. That doesn’t mean demand for labor has slacked off, as the extreme reactions of the financial markets suggested. The payroll weakness says more about the supply of labor than demand for it. Indeed, the two are in balance, which Fed Chief Powell even said last week. Other labor market barometers indicate strength: Hours worked are at a record high; so are wages—even adjusted for inflation. Companies aren’t firing more, though they are hesitating to hire so the duration of unemployment is up. The uncertainties related to Trump’s Tariff Turmoil might account for that.
US Labor Market: Still Resilient—Really!
Friday’s July employment report was a shocker. Payroll employment rose 73,000, which was weaker than the consensus estimate of 100,000. The bigger shock was the 258,000 downward revisions in payrolls during May and June. So over the past three months through July, the average increases in total and private-industry payrolls were only 35,300 and 51,700.
The stock market sold off sharply on the news. So did the dollar index (DXY). The price of gold rose. Bond yields fell, and so did oil prices. It’s hard to put a positive spin on this news, but not for us! Consider the following:
(1) Record hours worked. Aggregate hours worked in private industry rose
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