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July jobs slide
The U.S. economy shed 23,000 jobs in July, and the unemployment rate ticked down to 4.1% from 4.2% in June, according to the Bureau of Labor Statistics data released Friday.
“Nonfarm payrolls decreased by 23,000 jobs last month”
Reuters reported that the participation rate fell to a near 5-1/2-year low of 61.4% as another 264,000 people left the labor force, even as nonfarm payrolls decreased by 23,000 jobs.
NBC News said wage growth was 0.1% from June and 3.2% from one year ago, while inflation was 3.5% in its most recent reading.
NBC News also cited Heather Long, chief economist at Navy Federal Credit Union, saying, “That’s the number that many Americans are focused on right now,” and said she called the report “bleak.”
Markets recalibrate
Even with the July payroll miss, stocks rose after the report, with NBC News saying the S&P 500 jumped 0.5% and the Nasdaq Composite index increased 1%.
Reuters said financial markets priced in a 43.9% chance of the U.S. central bank hiking rates in September, compared with 57% before the jobs report, citing LSEG data.
Business Insider framed the same data as a potential relief for investors, noting that “US stocks moved higher even as data showed the US lose 23,000 payrolls in July.”
In a separate reaction, Brent Wilsey, the chief investment officer at Wilsey Asset Management, wrote in a note that “Friday's jobs report was not just much weaker-than-expected, it showed that the economy shed jobs during July.”
Fed, inflation, and politics
The jobs report landed as the Federal Reserve weighed whether to raise interest rates, with Reuters saying the Fed last week left its benchmark overnight interest rate in the 3.50%-3.75% range and that three members dissented.
“The Fed last week left its benchmark overnight interest rate in the 3.50%-3.75% range”
NBC News said the report likely eased some pressure on the Federal Reserve, which had been widely expected to hike the federal funds rate potentially as soon as September, and it reported that futures odds fell to about 40% after the release.
The New York Times said the labor market was “stable but stuck in second gear,” quoting Lydia Boussour, a senior economist at EY-Parthenon, and it added that hourly earnings grew 3.2 percent over the year, the slowest pace since May 2021.
The New York Times also tied the outlook to upcoming data and policy timing, noting that July’s Consumer Price Index reading will be released on Aug. 12 and that the Fed will get another jobs report before meeting again in September.
