While the U.S. added just 157,000 net new jobs in July 2018 (preliminary), year-to-date the country created 1.503 million new jobs compared to 1.291 million a year ago for the same period – a gain of 16.4 percent. The total gain in the prior 12-months of 2.40 million represented a 1.64 percent annual job growth rate compared to 1.54 percent a year ago.
The following graph shows the total job gains for the prior 12-months. Note the two hand-drawn lines showing the trends in job growth commencing from 2015 through 2017 and then for 2018. The job growth rate from 2015 to the end of 2017, while still positive, essentially diminished, but has turned upwards thus far in 2018.
The U.S. continues the trend of having more jobs than any time in history, as shown in the following graph. From the pre-recession peak in January 2008, total job loss was 8.7 million to the February 2010 trough. Since then, the U.S. has created 19.4 million net new jobs.
Job gains for 2018 are not a simple equation from the prior year, but vary month-to-month on a year-over-year basis. The next graph shows the net new job gains monthly since 2016. Four of the prior seven months posted greater job growth compared to a year ago, two were less and one the same.
Employment in the Leisure and Hospitality sector (in my opinion) is a great 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 1.58 percent versus 1.64 percent for the total economy. Given these data, again I see no recession on the horizon at this time foregoing unanticipated economic shocks. This is declining for the second month in a row (preliminary), however, signaling a potential commencement of softening consumer confidence.
Average hourly earnings were up 7 cents in July compared to June to $27.05. Hourly pay increased 71 cents in the past 12-months for a gain of 2.7 percent. Hourly earnings monthly since 2007 are shown in the following graph.
Other items in the July 2018 jobs report:
- Number of Persons Unemployed for Less Than 5 Weeks dropped by 136,000 from a month ago, now at 2.091 million versus 2.135 million a year ago – a 2.1 percent decline. Included in the unemployed were 1.8 million reentrants – people who previously worked but were not in the labor force prior to beginning their job search.
- Long-Term Unemployed (jobless for 27 or more weeks), now at 1.435 million versus 1.757 million a year ago, was down 43,000 from June
- Civilian Labor Force Participation Rateis now 62.9 percent, identical to a year ago
- Unemployment The number of unemployed people dropped from 6.956 million in July 2017 to 6.280 million as of the end of July 2018 – a drop of 284,000 (3.2 percent)
- Unemployment Rates varied greatly with respect to educational attainment in July 2018
5.1 percent – Less Than High School Diploma or GED
4.0 percent – High School Diploma, No College
3.2 percent – Some College or Associate’s Degree
2.2 percent – Bachelor’s Degree or Higher
- Employment-Population Ratiois now 60.5 percent versus 60.2 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 176,000 from June and is down to 4.567 million compared to 5.236 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 1.498 million was at 1.629 million a year ago. Within that group, 512,000 were classified as Discouraged Workers – persons not currently looking for work because they believe there are no jobs available for them. Discouraged Workers fell by 24,000 in the past 12 months but increased by 153,000 from June to July
The next table shows the job change (in thousands) for Employment Super Sectors. For example, manufacturing added 37,000 net new jobs in July 2018, 327,000 new jobs in the past 12-months (up 2.63 percent) and made up 8.55 percent of all jobs. Although the Mining and Logging Super Sector (which includes oil and gas) posted a 7.77 percent increase in the past 12-months, the category makes up just 0.49 percent of all U.S. jobs.
To read the entire news release on July 2018 employment click https://www.bls.gov/news.release/pdf/empsit.pdf
The job growth rate is no doubt being constrained by the lack of available workers. I reiterate my expectation is for an increase in the hourly compensation rate given that the lack of skilled workers to fill available positions.
Many of the reasons that the job growth rate remains stuck in the 1.6 percent range is that anyone that has marketable skills either already has a job, lives in a locale without demand for their skill set, or really does not want to work.
Ditto the previous month’s summary: Another Good Jobs Report.