Modest Job Gains in July

The past two months’ job gains indicate that the job market is cooling from its peak last year and is growing at a moderate pace. Total employment increased by 187,000 and the unemployment rate inched down to 3.5% in July. Wages grew at a 4.4% year-over-year growth rate, down 1.1 percentage points from a 5.4% gain in July 2022.

Total nonfarm payroll employment increased by 187,000 in July, following a gain of 185,000 in June, as reported in the Employment Situation Summary. The estimates for the previous two months were revised down. The estimate for May was revised lower by 25,000 from +306,000 to +281,000, while the June increase was revised down by 24,000, from +209,000 to +185,000. Despite restrictive monetary policy, nearly 5.3 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first seven months of 2023, about 1.8 million jobs were created, and monthly employment growth averaged 258,000 per month, following average monthly growth of 399,000 in 2022.

The unemployment rate decreased by 0.1 percentage points to 3.5% in July. The number of unemployed persons decreased by 116,000, while the number of employed persons increased by 268,000.

Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, was unchanged at 62.6% for the fifth consecutive month. Moreover, the labor force participation rate for people who aged between 25 and 54 edged down 0.1 percentage point to 83.4%. While the overall labor force participation rate is still below its pre-pandemic levels at the beginning of 2020, the rate for people who aged between 25 and 54 exceeds the pre-pandemic level of 83.1%.

For industry sectors, employment in health care (+63,000), social assistance (+24,000), and construction (+19,000) continued to trend up in July.

Employment in the overall construction sector increased by 19,000 in July, following a 26,000 gain in June. While residential construction added 7,800 jobs, non-residential construction employment gained 10,600 jobs in July.

Residential construction employment now stands at 3.3 million in July, broken down as 925,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 5,850 a month. Over the last 12 months, home builders and remodelers added 58,400 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,304,700 positions.

In July, the unemployment rate for construction workers rose by 0.9 percentage points to 4.5% on a seasonally adjusted basis. The unemployment rate for construction workers remained at a relatively lower level, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic.

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