Introduction

In July, the US economy added fewer jobs than expected, but strong wage growth and a decline in the unemployment rate to 3.5% reflected continued labor market strength.

The Labor Department’s employment report released Friday showed that job growth in May and June was revised down, which could indicate a slowdown in labor demand following the Federal Reserve’s rate hike.

A survey of households by the Department of Labor showed that the number of non-agricultural jobs increased by 187,000 jobs last month. June data has been revised down to show the addition of 185,000 jobs, up from the previously announced 209,000 jobs.

Job Expectations and Sectors

Economists polled by Reuters expected a 200,000 job increase. The US economy needs to create about 100,000 jobs per month to keep up with the growing working-age population.

The health sector came out on top among job-generating sectors last month after providing 63,000 jobs, while jobs in the financial services and construction sectors increased by 19,000 jobs each.

Unemployment Rate and Wage Growth

The unemployment rate fell from 3.6% in June to 3.5% in July, falling to levels not seen in over 50 years.

This is well below the Fed’s average latest estimate of 4.1% by the fourth quarter of this year.

Wages continued to rise at a steady pace. The average hourly wage rose 0.4% in July after increasing by the same level in June.