Skip to Content
August 3, 2018 Blog 1 min read
The July employment report may not excite anyone, but it also shouldn’t be viewed as disappointing. The economy is growing, and job creation remains on a steady path.

8-3-18 Employment Situation Chart The economy continues to grow at a solid clip, and job creation remained both a key support for that growth and a byproduct of it in July.

The jobless rate declined to 3.9% in July, as employers continued to add to their payrolls. Broader measures of unemployment also continue to decline, suggesting that not only are the ranks of the unemployed dwindling, but more workers are finding full-time work in their preferred field.

On the surface, job creation for the month may appear disappointing, as the 157,000 gain was softer than expected. However, upward revisions to the preceding two months added another 59,000 jobs, and the combined result of 216,000 moderately exceeded expectations, while falling in line with average monthly job creation of about 215,000 year to date.

Job creation in goods-producing industries was strong once again. The manufacturing sector led the way, with construction also posting solidly positive gains. Concerns about the growing trade rift between the U.S. and China and the broad impact of tariffs may be building, but that risk does not yet appear to be weighing on hiring in the manufacturing sector, despite the potential for the sector to bear the brunt of the disruption.

Average hourly earnings grew by 0.3% in July, lifting the year-over-year increase to 2.7%. Given tighter conditions and the sustained pickup in measures of consumer inflation, it seems likely that wage pressures will continue to build, but that has been long expected and is still elusive.

With the labor market seemingly on solid footing and no cool off in sight, the American worker appears to be in relatively good shape. Strength in the U.S. labor market should further support the economic expansion in the near term and the relatively upbeat attitudes of the American consumer.

The bottom line is that the July jobs report may not excite anyone, but it also shouldn’t sound any alarms. It largely reinforced the status quo, and that is still positive.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis non-factual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.