U.S. employers hired 164,000 workers in July, bolstering an erratic labor market whose growth remains significantly slower than in 2018.
The data from the Labor Department offers a gauge of the effects of President Trump’s global trade disputes, covering a period after the White House had more than doubled some tariffs on Chinese goods and was holding in reserve the possibility of double-digit duties on all remaining imports from the world’s second-largest economy.
Economists and lawmakers have long cautioned that such moves risk undercutting U.S. growth buoyed by GOP-led tax cuts in late 2017, and Trump’s decision Thursday to add 10% tariffs on $300 billion in Chinese goods — in addition to 25% duties previously imposed on another $250 billion — may heighten the effects.
There are already troubling indicators beneath the surface of a mostly reassuring jobs report, said Mark Hamrick, senior economic analyst with Bankrate.com. Average gains have slowed from 223,000 a month last year to 165,000, and the U.S. faces “accelerating headwinds that could begin to gather damaging force related to trade disputes, tariffs and global weakness,” he added.
While the unemployment rate held steady at 3.7% in July, the lowest level since 1969, payroll growth trailed the average estimate from economists of 165,000. The Labor Department also trimmed its previous estimates of May and June jobs growth by 41,000, and Ball State economist Michael Hicks said July’s numbers may be lowered as well.
Average hourly earnings, meanwhile, remained below 2018 peaks, and the average work week shrank to 34.3 hours, a signal that employers holding on to workers in a tight labor market are trimming expenses by reducing their hours, said Robert Rosener, an economist with the New York investment bank Morgan Stanley.
Such trends will be among data the Federal Reserve considers when determining whether to lower interest rates further. The central bank reduced its benchmark by 25 basis points this week, to a range of 2% to 2.25%, after months of pressure from Trump and mounting indications that U.S.-led trade wars were slowing economic growth and hurting business confidence, a factor in investment in new products and plants.
On its own, Friday’s jobs report doesn’t “materially alter the outlook for the economy or for the Fed, although some of the cracks in this month’s employment report should be watched over the next couple of months,” Rosener said.
