Financial News: U.S. Employment Unexpectedly Dips In July, Unemployment Ra

U.S. Employment Unexpectedly Dips In July, Unemployment Rate Edges Lower

(RTTNews) - A closely watched report released by the Labor Department on Friday unexpectedly showed a modest decrease in U.S. employment in the month of July.

The Labor Department said non-farm payroll employment dipped by 23,000 jobs in July compared to economist estimates for an increase of about 88,000 jobs.

The unexpected dip in employment partly reflected a notable decline in employment in local government education, which fell by 50,000 jobs.

Employment in the leisure and hospitality and retail sectors also decreased, while job growth was visible in the healthcare and social assistance and construction sectors.

The report also showed notable downward revisions to the pace of job growth over the two previous months.

The Labor Department said employment edged up by 20,000 jobs in June and climbed by 66,000 jobs in May, reflecting a combined downward revision of 103,000 jobs.

"Before today, many were expecting that the Fed had no choice but to raise rates in order to fight stubbornly high inflation, because the job market was so strong, but this report shows that isn't the case," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

He added, "Next week's CPI release will be important - and if the data continues to come in higher than expected, it could raise the probability of a rate hike at the Fed's next meeting - but today's jobs numbers should be enough to keep the Fed on hold for at least another meeting, which all things being equal is a positive for the stock market."

Meanwhile, the report also said the unemployment rate edged down to 4.1 percent in July from 4.2 percent in June. The unemployment rate was expected to remain unchanged.

The unexpected dip in the unemployment rate came as the labor force shrank by 264,000 persons, outpacing the 87,000-person decrease in the household survey measure of employment.

"While the unemployment rate is falling, that is mostly for the wrong reason-not enough workers. Immigration compensated for the aging of the workforce in the first few years of the post-pandemic expansion, but that's not happening anymore," Bill Adams, Chief U.S. Economist, Fifth Third Commercial Bank.

The Labor Department also said average hourly employee earnings crept up by $0.02 or 0.1 percent to $37.62 in July.

The annual rate of growth by average hourly employee earnings slowed to 3.2 percent in July from a downwardly revised 3.4 percent in June.

Economists had expected the pace of growth to come in unchanged compared to the 3.5 percent originally reported for the previous month.

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