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Here Are the Key Takeaways From US Jobs Report for July

By Christopher Anstey
A worker uses a hydraulic lift in New York. Photographer: Stephanie Keith/Bloomberg (Stephanie Keith/Bloomberg)

(Bloomberg) -- Here are the key takeaways from the US employment report for July released Friday:

  • Payrolls increased by 114,000, less than the 175,000 median forecast and undershooting all but one of 74 forecasts in Bloomberg’s survey. That weaker reading also came after a 29,000 cumulative downward revision to payroll gains for the previous two months. Average hourly earnings rose 0.2% on a monthly basis, also less than forecast, and on an annual basis increased by 3.6% — the least since May 2021.
  • The unemployment rate unexpectedly climbed to 4.3% in July, exceeding all 69 estimates in the Bloomberg survey. The 0.2 percentage point increase on the month means that the so-called Sahm Rule has been triggered. Coined by former Federal Reserve economist Claudia Sahm, it says that when the average jobless rate over three months is 0.5 percentage point above the 12-month low, a recession is coming. Sahm said on Bloomberg Radio Friday that “we’re not headed in a good direction.”
  • Private education and health contributed about half of the July payroll gain, with leisure and hospitality and government also adding jobs. Overall, private sector payrolls recorded their second-weakest increase since 2020.
  • The household survey showed that the labor force participation rate rose, unexpectedly, to 62.7%, back where it was in April. The Black unemployment rate held steady, at 6.3%, while the White rate rose to 3.8% from 3.5%. The Hispanic jobless rate increased to 5.3% from 4.9%.
  • The notably weaker-than-expected report ramped up bets on the Fed to lower interest rates three times this year, and for policymakers to kick off the cycle with a 50 basis point move in September, rather than 25. Two-year Treasury yields plunged as much as about 30 basis points, and were down 19 basis points as of 9:30 a.m. in New York, at 3.96%. Stocks tumbled at the open, with the S&P 500 down over 1.5% and the Nasdaq Composite falling 2.5%. The dollar slid.

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