The economy added 164,000 net new jobs in July 2019 (preliminary) short of the expectation of 171,000 new jobs by economists polled by MarketWatch. Job growth was at 1.51 percent compared to the 40-year compound annual growth rate of 1.43. The unemployment rate was unchanged from June at 3.7 percent.
The following graph shows the total U.S. Civilian employment numbers monthly since 2007 on a seasonally adjusted basis as reported the U.S. Bureau of Labor Statistics.
Total job gains for the prior 12-months are shown in the following graph. Many economists believe that the drop in 2019 is from the lack of skilled, readily available workers to hire. The past two months, however, have remained flat.
The unemployment rate varies significantly by level of education attainment, with each level having improved from a year ago. The following table shows the unemployment rates for July 2019 and 2018 by education. Overall, other than a few months this year, unemployment is the lowest in 50 years.
Employment in the Leisure and Hospitality sector (in my opinion) has been an excellent proxy of the overall health index of the U.S. economy. People do not spend money on vacations, cruises, entertainment, spas or dinners out unless they feel good about the future economy. My premise is that the U.S. economic outlook is healthy as long as the employment growth rate in Leisure and Hospitality matches or exceeds that of the country overall. Current Leisure and Hospitality job growth in the prior 12 months was 2.1 percent versus 1.5 percent for the total economy. At this time I see no recession on the horizon at this time foregoing unanticipated economic shocks given strong growth in leisure and hospitality employment.
Other items in the July 2019 jobs report:
- Number of Persons Unemployed for Less Than 5 Weeks rose by 240,000 from a month ago, and is now at 2.201 million versus 2.092 million a year ago (up 109,000)
- Long-Term Unemployed (jobless for 27 or more weeks) dropped by 248,000 versus June and is now at 1.166 million versus 1.418 million a year ago
- Civilian Labor Force Participation Rate is 63.0 percent is essentially flat from a year ago (62.9 percent)
- Unemployment The number of unemployed people dropped from 6.245 million in July 2018 to 6.063 million this July – a decline of 182,000
- Employment-Population Ratio is now 60.7 percent versus 60.5 percent a year ago – the bigger the better
- Number of Persons Employed Part Time for Economic Reasons (also known as involuntary part-time workers) are individuals desiring full-time employment but either had their hours cut back or cannot find a full-time job), declined by 363,000 from the prior month and is down to 3.984 million compared to 4.588 million a year ago
- Marginally Attached to the Labor Force (not currently counted in the labor force, want and are available for work and had looked for a job in the prior 12 months) now at 1.478 million was at 1.498 million a year ago. Within that group, 368,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them, down from 512,000 a year ago, a drop of 144,000 or 28.1 percent
The next table shows the job change (in thousands) for Employment Super Sectors. For example, manufacturing added 152,000 net new jobs in the past 12-months (676,000 in the prior 60 months) and made up 8.6 percent of all jobs. Although the Mining and Logging Supersector (which includes oil and gas) posted a 2.3 percent increase in the past 12-months, the category made up just 0.5 percent of all U.S. jobs. A large change in the prior five years was in government employment, declining from 14.8 percent of the workforce then 14.1 percent as of July 2019.
To read the entire latest news release on U.S. employment click https://www.bls.gov/news.release/pdf/empsit.pdf
The job growth rate continues to be constrained by the lack of available workers. I reiterate my expectation for an ongoing increase in the hourly wage rate given the lack of skilled workers to fill available positions.