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July's Labor Market Update
August 4th, 2023
Another busy week for labor market data! The BLS released their report this morning, initial jobless claims came out on Thursday, and ADP private employment data was released on Wednesday. We have read through the reports and are providing you with our summary. This is what you need to know.
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Since our last update, the Federal Reserve Bank increased interest rates by 0.25%. That is the 11th increase since the Fed started aggressively targeting inflation in March of 2022. There were fears that these rate hikes might start to impact the labor market. So far, it doesn't seem to have impacted the labor market as much as we had previously expected. This week’s numbers are GREAT. Here are the takeaways:
ADP employment numbers show an increase of 324,000 new jobs in July! Crushing the forecast of 175,000 new jobs. Most of the job growth was in the leisure and hospitality industry (+201,000).
The ADP wage growth report shows that wages are up, but they have increased faster for individuals changing jobs compared to those staying at their current job. Job changers had a 10.2% annual increase in wages, and stayers had 6.2% wage growth.This might explain the high turnover rates we have been experiencing. There is an incentive to change jobs.
Jobless claims, an indicator of how many people are being laid off, came in at 227,000. This number was as expected.
Nonfarm productivity, which measures hourly output per worker, increased at a 3.7% annualized rate last quarter, the Labor Department reported. I previously discussed the declining productivity and my concerns. Happy to see the numbers are improving.
Nonfarm payroll a measure of how many new jobs were created was 187,000 in July. Expectation was 200,000 new jobs.
Unemployment rate came in at 3.5 percent and expectation was 3.6%
In the News!
On Sunday, I appeared on The Race, which aired on NBC in the Cincinnati area. Hope you enjoy this media appearance. My mom sure was proud.
Interest Rates: How far does your budget stretch in an evolving economy? | The Race
YouTube Video of the Week
What they don’t teach you in introductory economics courses-
Have a happy Friday.
Dr. A and Team!