Strong July jobs for U.S. tamp down slowdown fears

After last week’s news of a third straight quarter of below-trend GDP growth, many were looking to Friday’s July jobs number to see if the Obama Recovery may be coming to an end soon. Well, if you were banking on recession, I got some bad news for you, because it looks like things are springing back to life.

Total nonfarm payroll employment rose by 255,000 in July. Job gains occurred in professional and business services, health care, and financial activities. Mining employment continued to trend down…

In July, average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.69. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.59 in July. (See tables B-3 and B-8.)

The change in total nonfarm payroll employment for May was revised from +11,000 to +24,000, and the change for June was revised from +287,000 to +292,000. With these revisions, employment gains in May and June combined were 18,000 more than previously reported. Over the past 3 months, job gains have averaged 190,000 per month.

Sorry Drumpkins, maybe the country isn’t falling off the edge quite yet.

That last part is arguably the most encouraging one. After 2016 had seasonally-adjusted job growth for 2016 of only 151,000 a month, this is now two straight months of total job gains over 250,000, and an average private sector job gain of 238,000 for those months. It indicates that May’s slowdown was a one-time blip, and the increase in average hourly earnings is also a very good sign, as that figure is now up 1.7% since the start of the year, more than twice the rate of inflation in that time.

The unemployment rate also stayed at 4.9%, and for positive reasons, as the household survey 407,000 people entered the work force, and employment was up by 420,000. This bumped up the participation rate and the employment-population ratio, reversing slight declines in recent months for those stats.

The only item of concern in the report is the continued decline in employment for Mining, as that sector lost another 6,100 jobs in July, is down nearly 128,000 jobs in the last 12 months, and down over 220,000 jobs from its peak in September 2014. And with oil prices going below $40 a barrel for part of this week, it seems unlikely that this sector will bounce back any time soon.

But the mining part is the only blot on what is otherwise a strong jobs report all around, and it gives us a chance to breathe a sigh of relief after that lame 1.2% GDP growth that came out last week. Let’s see if other reports follow suit to see if things are truly as pleasant as the weather we’re experiencing for this weekend.