The US labor market continues to show signs of cooling as the economy added 187,000 new jobs in July, while the unemployment rate fell to an impressive 3.5%, according to the Bureau of Labor Statistics’ report released on Friday. Economists had expected job gains to reach 200,000, with the unemployment rate remaining unchanged at 3.6%.
The latest data reveals that job gains in July were the slowest since December 2020. Over the past year, the average monthly job gains have held steady at an encouraging 312,000.
Wages, a closely monitored indicator of workers’ leverage in the labor market, saw surprising growth last month, rising by 0.4% on a monthly basis and 4.4% year-on-year. Economists had anticipated a more modest increase of 0.3% over the previous month and 4.2% compared to last year.
Federal Reserve officials are likely to view the slowdown in hiring as a welcome sign, as they seek to manage the labor market to control inflation. However, the notable wage gains might signal to some Fed policymakers that additional rate hikes are necessary to curb inflationary pressures.
In response to the latest jobs report, Nancy Vanden Houten, lead US economist at Oxford Economics, stated, “The July jobs report is just one data point before the September FOMC meeting, but we think it offers enough evidence of cooling labor market conditions to weigh in favor of no additional rate hikes. However, an upside surprise in any of the forthcoming data on the labor market and inflation would put another rate hike back on the table.”
The Federal Reserve is scheduled to announce its next monetary policy decision on September 20. In the previous month, the Fed raised its benchmark interest rate by an additional 0.25%, bringing the fed funds rate to its highest level since 2001.
Despite the moderate cooling of the labor market, investors remain optimistic, reflecting the overall strength of the US economy. Key market indices have shown positive movement, with the S&P 500 ($SPX) reaching 4,527.10, marking an increase of 25.21 points or 0.56%. The DJIA ($DJI) experienced a notable surge of 221.89 points or 0.63%, reaching 35,437.78. The NYSE ($NYA) demonstrated a commendable uptick of 88.74 points or 0.55%, trading at 16,214.17. Meanwhile, the NASDAQ ($COMPX) showed the most significant growth, leaping by 126.61 points or 0.91% to hit 14,086.33.
In the market movers section, Mullen Automotive Inc (MULN) witnessed a decline of 11.28%, currently valued at $0.12. T2 Biosystems Inc (TTOO) experienced a decrease of 26.71%, reaching $0.26. Nikola Corp (NKLA) showcased a drop of 13.05%, priced at $2.95. On the other hand, Amazon.com Inc (AMZN) surged by 10.41%, currently valued at $142.33. Tivic Health Systems Inc (TIVC) displayed a strong performance with a growth rate of 9.36%, escalating to $0.06. Ebet Inc (EBET) faced a decrease of 21.90%, currently trading at $0.04.
Despite the ongoing cooling in the labor market, the US economy remains resilient, and market sentiment remains largely positive. As the trading day progresses, investors will continue to closely monitor market dynamics and forthcoming economic data to make informed investment decisions.