Choose your settings
Choose your language
Economic News

United States: Employment Surprises to the Downside, and the Unemployment Rate Rises Again

August 2, 2024
Marc-Antoine Dumont
Senior Economist

Highlights

  • According to the establishment survey, total nonfarm payroll employment went up 114,000 in July.
  • Average hourly wage growth slowed slightly, with a 0.2% gain in July after June’s 0.3% increase. Year-on-year wage growth came in at 3.6%.
  • The household survey showed similar growth in employment, with 67,000 jobs created, and the jobless rate rose another 0.2%, ending the month at 4.3%.

Comments

Job creation according to the establishment survey came in below the consensus forecast of 180,000. However, the surprise is less dramatic than it was in May, when the difference between the forecast and preliminary results was closer to 100,000.

 

Drilling down into July’s results, we can see that the slowdown in growth was fairly broad-based. Of the 250 industries covered by the survey, the proportion where employment increased fell from 56.0% in June to 49.6% in July. Once again, we saw a decline in temporary help services (-20,000), where the number of workers has decreased in 27 out of the past 28 months. In the past, this drop might have been viewed as a warning sign for labour market problems in general, but the sector’s decline has been so sharp—and so isolated—that we believe the problem is specific to this industry.

 

The unemployment rate rose for the fifth month in a row, boosted by a rapid increase in the labour force and the number of unemployed individuals, and at 4.3%, July’s print is the highest since October 2021. That said, the household survey is less reliable and more volatile, and its margin of error is much higher than the establishment survey’s.

Implications

This rapid slowdown in employment growth in the United States comes just two days after the Federal Reserve (Fed) held its key rate at 5.5%. With wage growth also slowing—albeit not as quickly—the US job market’s recent resilience seems to be fading. As such, we expect the Fed to start cutting rates in September.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.