Payroll growth rose in line with expectations in July and the unemployment rate remained at 3.7% amid a sharp jump in the size of the labor force to its highest level ever.
The Labor Department reported Friday that payrolls increased 164,000 during the month, just 1,000 below the 165,000 Dow Jones forecast. This also was about the average monthly gain for the year. In 2018, the economy created 223,000 jobs a month.
Major stock indexes had little reaction. They were already down in premarket trading before the report.
Wages also continued to increase, with the 3.2% year-over-year gain topping expectations by one-tenth of a percentage point. Average weekly hours edged lower to 34.3.
Economists had expected the unemployment rate to drop to 3.6%, which would have tied a 50-year low, but an influx of 370,000 new workers to the labor force brought the participation rate up to 63%, its highest since March. The total labor force of 163.4 million set a record high.
Real unemployment rate
Along with that, a broader measure of unemployment that accounts for discouraged workers and the underemployed, sometimes called the “real” unemployment rate, dropped to 7%, its lowest since December 2000.
While the numbers reflected a jobs market that continues to edge to full employment, the data also showed that companies are continuing to hire despite persistent fears of a broader economic slowdown.
Professional and technical services jobs led the way with 31,000 new positions. Health care rose 30,000, social assistance added 20,000 jobs and financial activities increased 18,000. Despite simmering worries of a manufacturing slowdown, jobs in the sector increased by 20,000, though motor vehicles and parts fell by 1,500. Also on the negative side, mining fell by 5,000.
There was some bad news from revisions to previous monthly counts. June’s robust 224,000 was cut to 193,000 while May’s anemic 72,000 original count fell to 62,000. Taken together, the revisions cut 31,000 from the previous estimates.
The report comes amid worries that the U.S. economy could slide into recession in 2020, owing to a weaker global outlook and worries over the escalating trade war with China. Federal Reserve officials voted Wednesday to cut their benchmark interest rat a quarter percentage point, citing the global slowdown as well as concerns over weak inflation.
At the same time, the tit-for-tat trade battle has taken its toll on business confidence and manufacturing, a sector whose diffusion index, or measure of companies expanding vs. contracting on hiring, ticked down to 56.6 from 57.2 in June.