In July, job growth in the US fell more than expected

The economy has added 187,000 jobs, and the jobless rate has dropped to 3.5%.

The number of jobs created in the US in July was lower than expected, and the numbers for the two months before that were also lowered. This is because the job market has slowed down after almost 18 months of interest rate hikes.

According to figures released by the Bureau of Labour Statistics on Friday, the economy added 187,000 new non-farm jobs. This is less than the 200,000 jobs that were expected to be added.

That came after the 185,000 jobs added in June were trimmed down, and it is a good sign that the Federal Reserve is making progress in its fight against inflation.

Investors and the Fed have been keeping a close eye on the health of the job market because pay and job growth are two of the most critical factors in inflation.

But the job market as a whole was still in good shape, and the jobless rate had dropped to 3.5%.

The growth in hourly wages was better than predicted, at 4.4% year over year. This is well above the levels that are in line with the Fed’s inflation target of 2%. The average prediction was for wages to go up by 0.3% per month, but they went up by 0.4%.

In the past few weeks, people have become more hopeful that the central bank will be able to control inflation without putting the country into a deep recession. In June, consumer price inflation dropped more than predicted, and the preferred indicator of the central bank, the core measure of the personal consumption expenditure index, fell to its lowest level since October 2021.

Moving Markets

But the Fed has warned that if the job market stays strong, it may be harder to bring inflation all the way down to where it needs to be.

Agron Nicaj, a US economist at MUFG, said, “I think the last set of inflation numbers gave the market too much hope.” “I would expect inflation to stay high as long as people keep spending a lot and the job market stays strong.”

In the past few months, all sectors have added jobs, but Nicaj said he would pay close attention to any signs of weakness in the manufacturing sector. There were 2,000 fewer jobs in manufacturing.

This week, a poll from the Institute for Supply Management showed that activity in the significant sector was going down, and Nicaj said that “a lot of signs suggest that it will be one of the first industries to have consistently negative employment growth.”

Last week, the Fed raised interest rates to their highest level in 22 years. The Fed said it might raise rates again if necessary, but most investors think the central bank will keep rates the same for the rest of the year, according to futures markets.

As of Thursday night, the markets thought there was only a 17% chance that the Fed would raise rates at its next meeting in September and a 38% chance that rates would go up at least once by November.


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