July 2018 Jobs Review
Jobs Review Snapshot
- 157,000 jobs were created in July, leading to an average of 224,000 over the last 3 months.- Over 1.5 million jobs have been created since the Tax Cuts and Jobs Act was enacted.
- The employment-to-population ratio rose to 60.5%, the highest since January 2009.
Details
The Bureau of Labor Statistics (BLS) reports that 157,000 jobs were added in July, 170,000 in the private sector and 13,000 fewer in the government sector. The largest gains were in professional and business services (+51,000), leisure and hospitality (+40,000), and manufacturing (+7,000). The largest job losses were reported in financial activities (-5,000), mining/logging (-4,000), and utilities (-2,800).
The employment-to-population ratio increased to 60.5% from 60.4%, the highest since January 2009. The overall (ages 16 and older) labor force participation rates (LFPR) was unchanged at 62.9%. The prime-working age (ages 25 to 54) LFPR increased to 82.1% from 82.0%. It remains short of its 83% average from the previous business cycle’s expansion, which suggests room for elevated rates of economic growth.[i]
The headline unemployment rate (U-3), which counts as unemployed those who searched for work in the last four weeks, ticked down from 4.0% to 3.9.[ii] The “real” unemployment rate (U-6), fell from 7.8% to 7.5%, the lowest since May 2001. The U-6 includes those in U-3, those who searched for work in the past twelve months, and those who want full-time work but can only find part-time work.
Average hourly earnings (AHE) and average weekly earnings (AWE) of production and nonsupervisory workers[iii] were 2.7% and 3.0% higher than 12 months ago, respectively.[iv] An AWE growth rate that exceeds the AHE growth rate indicates people are working more hours per week since last year. During the previous expansion AHE and AWE each averaged 3% growth per year, compared with averages of only 2.1% and 2.4% in the Obama Administration’s portion of the current expansion, respectively.
Context
This employment report shows the U.S. economy is continuing to gain strength. Though job creation was dampened by the bankruptcy of Toys ‘R’ Us, BLS found that in May and June, 59,000 more jobs were created than was estimated earlier. Also, several notable milestones were set in this report:
Noteworthy
The jobs number for May was revised up from 244,000 to 268,000 (final estimate) and June’s was revised up from 213,000 to 248,000 (second estimate), for a total gain of 59,000 jobs.
The August Employment Situation release is scheduled for September 7 at 8:30 a.m.[i] JEC considers the prime working-age LFPR, which measures the ratio of those aged 25 to 54 who are currently employed or have sought work in the past four weeks, a better indicator because demographic factors are affecting the overall LFPR. The dates used to calculate the previous business cycle expansion’s 83% average prime-age LFPR are November 2001 to December 2007.
[ii] The U-3 rate is less meaningful than it once was because the labor force participation rate has been low since the last recession.
[iii] JEC prefers the production and nonsupervisory workers measure of wages as more representative of the average worker. Production and nonsupervisory workers account for over 82% of all private-sector employees. For service-producing industries, this measure excludes supervisors and employees who are also owners. For the goods-producing sector, workers engaged in management, sales, and accounting are excluded.
[iv] These measurements consist only of gross wages and salary and do not account for non-monetary benefits and compensation. They are not adjusted for inflation. AWE accounts for the average number of hours worked while AHE does not.
