Unemployment Rises to 4.3% in July

(Image courtesy of BLS)

Total nonfarm payroll increased by 114,000 in July, per the U.S. Bureau of Labor Statistics.

However, the unemployment rate rose to 4.3%, up from 4.1% in June and from 3.5% year-over-year.

Job gains were in health care, construction, and transportation and warehousing. The information sector lost jobs.

The change in payroll was revised down by 2,000 for May, from a gain of 218,000 to 216,000. It was revised down by 27,000 for June, from 206,000 to 179,000.

“The job market definitively slowed in July. Nonfarm payroll growth at 114,000 was well below the 12-month average of 215,000, while the unemployment rate moved up to 4.3%, and wage growth slowed to 3.6%,” said MBA SVP and Chief Economist Mike Fratantoni. “This slowing is consistent with trends in other data including the slower hiring rate, increases in initial claims for unemployment insurance, signs of contraction in the manufacturing sector, and some signs of stress for households. Additionally, payroll growth for the prior two months was revised down by a cumulative 29,000 jobs.”

“The Federal Reserve kept the federal funds target unchanged at its July meeting but hinted at a cut in September. The weakness in this report including the slower rate of wage growth and the higher unemployment rate certainly support such a cut, but the next inflation report needs to confirm that price growth is also slowing,” Fratantoni continued. “The market is moving ahead of the Fed, bringing down longer-term rates including those for mortgages, which should lead to both more home purchases and a pickup in refinance activity.”

“While lower mortgage rates will be welcome news for potential home buyers, we also want a resilient labor market. Home buyers need to feel confident about their jobs to make what is likely to be the biggest financial decision of their life,” noted First American Deputy Chief Economist Odeta Kushi.