With 528,000k jobs added in July, the job market persevered like a bird in the wind, despite a 75-basis-point interest rate hike, $5 gasoline, and a bear market. Amid stiff headwinds and rising uncertainty, strong consumer spending continued to drive robust demand for labor and buoy the labor market. Job gains remain well above their 2011–2019 pace, when 194k payrolls were added per month, on average.
Profound and pervasive gains
- The economy added 528k jobs in July. That’s the largest gain in 6 months. A key figure in this report is the diffusion index, which came in hot at 68.6, signaling that job gains were very broad-based. Healthcare (96.6k), leisure and hospitality (96k), and professional and business services (89k) led the gains.
- In the few industries with job losses, the losses were very small. For example, at the high end, motor vehicles parts manufacturing lost 2.2k jobs.
- Despite the huge slowdown in the housing market and in mortgage applications, employment in the real estate industry was unchanged, and credit intermediation activities lost only 700 jobs.
Almost no recession warning signs
- Despite a steady stream of layoff announcements over the past two months, the unemployment rate fell to 3.5% and the median unemployment duration stayed the same at just 8.5 weeks. The share of unemployed people who lost their jobs within the last 5 weeks fell from 38.3% to 36.9%. That suggests the labor market is tight enough that people who are being laid off are able to find new jobs quickly.
- The unemployment rates ticked down for prime-age workers (from 3.0% to 2.9%) and for women (from 3.6% to 3.4%).
- Two measures in the report tend to be leading indicators of recessions: the number of people working part-time for economic reasons, and the number of temporary help services jobs rose. The first moved in the wrong direction, increasing by 303k to 3.9 million, with more workers forced to take part-time jobs because of difficulty finding full-time work. But the second moved in the right direction. Temporary help services workers tend to be first in, first out—the first terminated during times of economic uncertainty when companies are hardening themselves against the risk of a recession and trimming costs. But that industry posted gains of 9.8k jobs—more than in the prior month.
The labor market is doing better than we thought
- Upward revisions to the prior 2 months tell us that the job market was even better in the second quarter than we thought. The change in total nonfarm payroll employment for May was revised up by 2k, from 384k to 386k, and the change for June was revised up by 26k, from 372k to 398k. With these revisions, employment in May and June combined is 28,000 higher than previously reported.