US Unemployment Rate Shoots Up To 4.3%
US Unemployment Rate Shoots Up To 4.3%
Not enough job opportunities and wage growth slows
July jobs report: Unemployment rate jumps to 4.3%, job gains total just 114,000 as labor slowdown deepens
·Reporter
Updated Fri, Aug 2, 2024, 9:52 AM GMT-33 min read
The US economy added fewer jobs than expected in July while the unemployment rate unexpectedly rose to its highest level in nearly three years, the latest sign of a broader summer slowdown in the US labor market.
Data from the Bureau of Labor Statistics released Friday showed the labor market added 114,000 nonfarm payroll jobs in July, fewer additions than the 175,000 expected by economists.
Meanwhile, the unemployment rose 4.3%, up from 4.1% June. The unemployment rate is now at its highest level since October 2021. July's job additions came in lower than the 179,000 jobs added in June.
Notably, the BLS said Hurricane Beryl had "no discernible effect" on the employment data for July.
Wage growth, an important measure for gauging inflation pressures, slowed to 3.6% year-over-year, down from 3.9% in June. On a monthly basis, wages increased 0.2%, lower than the 0.3% gain seen in June. Friday's report also showed the labor force participation rate falling to 62.7% from 62.6% in June.
Friday's report is the latest economic data point to show signs of a cooling across the US economy. Data from the Department of Labor published Thursday showed 249,000 initial jobless claims were filed in the week ending July 27, up from 235,000 the week prior and the most since August 2023.
This followed a report earlier this week that showed a decrease in job openings as of the end of June, while hirings fell and quits hit their lowest level since November 2020.
The confluence of data helped spark a market sell-off on Thursday as the 10-year Treasury yield tumbled to its lowest level since February. Stock futures were sharply lower on Friday morning following the July jobs report.
The unemployment rate hitting 4.3% triggered the Sahm Rule, as the three-month average of the national unemployment rate has now risen more than 0.5% from the previous 12-month low. The rule has successfully predicted recessions 100% of the time since the early 1970s.
Economist Claudia Sahm, the rule's namesake, said recently that unique dynamics in the post-pandemic labor market may render the rule less useful in calling a recession this time around.
Asked whether he was worried about the Sahm Rule being triggered at a press conference on Wednesday, Federal Reserve Chair Jerome Powell said, "The question really is one of are we worried about a sharper downturn in the labor market. The answer is we are watching carefully for that."
He characterized the rule as a "statistical regularity," adding: "It's not like an economic rule where it's telling you something must happen."
The unemployment rate hitting 4.3% triggered the Sahm Rule, as the three-month average of the national unemployment rate has now risen more than 0.5% from the previous 12-month low. The rule has successfully predicted recessions 100% of the time since the early 1970s.
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https://finance.yahoo.com/news/july-jobs-report-unemployment-rate-jumps-to-43-job-gains-total-just-114000-as-labor-slowdown-deepens-190219766.html
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