The Employment Situation for July 2023

The US added 209 thousand jobs last month, which is a positive number despite reflecting a bit of a slow down from the last few months, which averaged about 275 new jobs each. 

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The unemployment rate also dipped back down by a tenth of a point to 3.6% after having made a three-tenths of a point jump up the month prior from the more than 50-year low of 3.4% unemployment that we’ve hit twice already in 2023 in both January and April. 

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As the unemployment rate has been hovering at or above these historic lows for the entire calendar year now, the labor force participation rate has remained constant at 62.6% for the 4th consecutive month, which underscores the stability that the job market has maintained despite the most significant interest rate hikes in 40 years

At the same time, however, while the number of long-term unemployed dropped by more than 80 thousand last month to about 1.1 million, that figure isn’t far off the 1.06 million long-term unemployed registered in February of this year, which further highlights the stability we’ve experienced so far this year.

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Also, the number of people doing part-time work temporarily because full-time work was not available to them increased by 444 thousand people to about 4.1 million this month, but again that figure is essentially on par with the 4.1 million registered in March, so fairly consistent here as well.

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As for the job additions, the largest number of additions were in the government sector, with state governments adding about 27 thousand jobs, while local governments added about 32 thousand.

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The healthcare industry wasn’t far behind, adding about 41 thousand jobs last month, followed by the social assistance and construction industries, which each added about 24 thousand jobs. The professional and business services and leisure and hospitality industries both added about 21 thousand jobs, as well. 

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Despite the net total of more than 200 thousand new jobs added last month across the US as a whole, there were a couple industries that actually saw their ranks shrink - the retail and the transportation and warehousing industries - which lost about 11 thousand jobs and about 7 thousand jobs, respectively.

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Average hourly earnings went up by 12 cents to $33.58, capping a 4.4% increase in total over the last 12 months. For non-supervisory employees in the private sector, wages rose by 11 cents to $28.83, and the average workweek rose by 6 minutes to 34.4 hours. 

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Mployer Advisor’s Take

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The job market is cooler than it was last year, even a little cooler than it was earlier this year, but it is still a very hot job market by historical standards. 

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The intended purpose behind the 10 rate hikes the Fed has issued over the last year and a half has been to equalize supply and demand in the labor market, which has favored labor since the rebound following the initial pandemic slump as a result of huge numbers of retirements and health-related issues that significantly depleted the labor supply. 

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Even against the headwinds that those increased borrowing costs are creating, however, the economy and job market continue barreling ahead, though the resulting drag may be beginning to finally appear. 

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It remains to be seen, of course, whether that drag will ultimately increase and slow hiring to a point where labor supply and demand are more in balance, or whether this month’s data is an underperforming outlier that won’t be indicative of how the trend evolves in the coming months.

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But if historical data is of much use in making forecasts about the movement we’re likely to see in the near term, whether positive or negative, that movement is likely to be relatively small given the consistency and lack of major change that have become the norm of late.

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