The Employment Situation for July 2024

Editor's Note: This report is based on survey data from June 2024 that was published in July 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)

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The unemployment rate hit 4.1% as of the latest report from the Bureau of Labor Statistics, which is the highest the unemployment rate has been since November 2021, albeit still well within the range of a healthy job market.

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US employers added 206 thousand jobs, which slightly exceeded the 200 thousand that were expected. That said, the latest report also included downward revisions of the job additions reported in April and May amounting to 111 thousand jobs, which is a reduction of almost 25% of new jobs from what was initially reported.

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The number of unemployed people climbed a bit to about 6.8 million after hovering around 6.5 million for several months, and the number of long-term unemployed made a significant jump up by about 166 thousand up to 1.5 million last month, as well. 

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Of the approximate 200 thousand new jobs added, the largest portion were government jobs, which grew by 70 thousand payroll entries -  a significant improvement over the approximate 50 thousand government jobs added on average over the last year.

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The healthcare industry was also responsible for a significant chunk of the new jobs, netting almost 50 thousand new jobs, which is strong albeit down from the 64 thousand monthly average, followed by the social assistance and construction industries, which each grew by about 25 thousand jobs last month.

Industries that recorded a net reduction in jobs last month include the retail and professional services industries, which dropped about 9 thousand and 17 thousand jobs respectively, while there was no meaningful change in the employment numbers in the energy, manufacturing, warehousing, transportation, information, financial activities, and leisure and hospitality industries. 

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The average workweek didn’t budge from 34.3 hours per week for the third month in a row, while average hourly pay rose by 10 cents to $35.00 per hour, which is a 0.3% jump over the month and represents a slight slowing in rate increase from the month before. Hourly wages are up 3.9% total over the last year.

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Mployer Advisor’s Take

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On one hand, there are economic professionals who describe the latest jobs report as the ideal balance, with a job market that’s neither too hot nor too cold, but instead is right in the sweet spot in the middle that the Fed is targeting.

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On the other hand, however, there are plenty of experts of equal stature who are starting to call more attention to the potential problems on the horizon.

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Beyond the dramatic downsizing of the last couple of months of job gains, another potentially troubling sign is the sharp reduction in temporary worker employment recorded last month, which can often foretell employer expectations that their growth will slow, stop, and or reverse. 

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Another problematic indicator worth keeping an eye on is the noteworthy increase in the percentage of unemployed people who are now long-term unemployed, which has grown nearly 3 and a half percent in the last year and now accounts for 22% of the total unemployed population in the US.

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The Fed will meet again at the end of this month and determine whether or not to keep interest rates where they are or whether to start bringing them down, and this report (including recent revisions) certainly makes a rate cut or two this year more likely and markets seem to believe we remain on track for  a quarter point decrease in September. 

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As previously noted, however, any rates that may come to be are far from guaranteed at this point, even if markets are largely pricing in a pair of quarter point drops before 2025. 

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From this onlookers perspective at least, the latest report makes an interest rate reduction sometime this fall now more likely than not, but another report like this one and a rate reduction this year will graduate to plain old ‘likely.’ 

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