With analyst and trader expectations about today's payrolls report fluctuating wildly, with some expecting a sizable drop after this week's disappointing ADP report and ISM employment components not to mention rolling over high frequency date...
... while others hoping the recent trend of payrolls increases continues after president Trump tried to stoke optimism saying to expect a "big number", moments ago the BLS reported that in the end the good news won out with the US economy adding 1.763MM, which while above the 1.48 million estimate was still well below June's record 4.8MM surge.
Still, as the ADP payrolls report hinted, the manufacturing sector is starting to sputter, with just 26K jobs added in July.
Putting the rebound in context, the US economy still has a ways to go before it fills even half the labor gap that opened after the March covid shutdowns.
With more people returning to work, especially lower paid workers, the average hourly earnings declined once again, shrinking to 4.8% Y/Y from 4.9% last month, if well above the 4.2% expectation.
The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.5 hours in July. In manufacturing, the workweek rose by 0.7 hour to 39.7 hours, and overtime increased by 0.3 hour to 2.8 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.0 hours
The unemployment rate also continued to slide, and from 11.1% last month it declined to just 10.2% in July, well below the 10.6% expected.
One reason for the rate improvement: the participation rate dipped from 61.5% to 61.4%
Curiously, almost the entire gain in payrolls was the result of a shrinkage in the number of "temporary unemployed" which dropped by 1.34MM to 9.225MM.
The question is: at what point do all these millions in "temporary layoffs" become permanent.
Looking at the details of the jobs report, the largest employment increases in July occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.
- Employment in leisure and hospitality increased by 592,000, accounting for about one-third of the gain in total nonfarm employment in July. Employment in food services and drinking places rose by 502,000, following gains of 2.9 million in May and June combined. Despite the gains over the last 3 months, employment in food services and drinking places is down by 2.6 million since February. Over the month, employment also rose in amusements, gambling, and recreation (+100,000).
- Government employment rose by 301,000 in July but is 1.1 million below its February level. Typically, public-sector education employment declines in July (before seasonal adjustment). However, employment declines occurred earlier than usual this year due to the pandemic, resulting in unusually large July increases in local government education (+215,000) and state government education (+30,000) after seasonal adjustment. A July job gain in federal government (+27,000) reflected the hiring of temporary workers for the 2020 Census.
- In July, retail trade added 258,000 jobs. Employment in the industry is 913,000 lower than in February. In July, nearly half of the job gain in retail trade occurred in clothing and clothing accessories stores (+121,000). By contrast, the component of general merchandise stores that includes warehouse clubs and supercenters lost jobs (-64,000).
- Employment in professional and business services increased in July (+170,000) but remains 1.6 million below its February level. The majority of July's gain occurred in temporary help services (+144,000).
- In July, the other services industry added 149,000 jobs, with most of the increase occurring in personal and laundry services (+119,000). Since February, employment in other services is down by 627,000.
- In July, health care added 126,000 jobs, with employment growth in offices of dentists (+45,000), hospitals (+27,000), offices of physicians (+26,000), and home health care services (+16,000). Job losses continued in nursing and residential care facilities (-28,000). Employment in health care is down by 797,000 since February.
- In July, employment in social assistance increased by 66,000, with child day care services accounting for most of the gain (+45,000). Employment in social assistance is 460,000 lower than in February.
- Employment in transportation and warehousing rose by 38,000 in July, following an increase of 87,000 in June. Despite job gains over the past 2 months, employment in the industry is down by 470,000 since a recent peak in January. In July, employment rose in transit and ground passenger transportation (+20,000), air transportation (+16,000), and couriers and messengers (+9,000).
- Manufacturing employment increased by 26,000 in July. An employment gain in motor vehicles and parts (+39,000) was partially offset by losses in fabricated metal products (-11,000), machinery (-7,000), and computer and electronic products (-6,000). Although manufacturing has added 623,000 jobs over the past 3 months, employment is 740,000 lower than in February.
- Financial activities added 21,000 jobs in July, with most of the gain in real estate and rental and leasing (+15,000). Since February, employment in financial activities is down by 216,000.
- In July, construction employment changed little (+20,000), following job gains of 619,000 in May and June combined. However, employment in the industry remains 444,000 below its February level.
- Mining continued to shed jobs in July (-7,000), reflecting a loss in support activities for mining (-11,000). Mining has lost 127,000 jobs since a recent peak in January 2019, although nearly three-fourths of this decline has occurred since February 2020.