OAN Staff James Meyers
7:56 AM – Friday, August 2, 2024
U.S. job growth slowed more than expected in July, with the unemployment rate increasing 4.3%, leading to fears that the labor market is faltering and the economy is heading for a possible recession.
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The Labor Department’s Bureau of Labor Statistics reported Friday that employers added 114,000 jobs in July, missing the 175,000 gain forecast by economists. The unemployment rate also unexpectedly grew higher to 4.3% against expectations that it would hold steady at 4.1%.
The latest report marks the highest level for the jobless rate since October 2021.
“Temperatures might be hot around the country, but there’s no summer heatwave for the job market,” said Becky Frankiewicz, president of ManPowerGroup North America. “With across-the-board cooling, we have lost most of the gains we saw from the first quarter of the year.”
Unemployment was expected to remain steady at 4.1%, according to a survey of economists by the data firm FactSet.
The latest numbers also had an impact on Wall Street Friday morning, with Dow futures dropping over 300 points an hour before the opening bell.
Meanwhile, over the past three months, the unemployment rate has averaged 4.13%, which is 0.63 percentage points higher than the 3.5% rate recorded in July 2023.
“The latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession,” said Jeffrey Roach, chief economist at LPL Financial. “However, early warning signs suggest further weakness.”
The numbers also raise the alarm bells on whether the Federal Reserve has waited too long to cut interest rates. Lawmakers voted on Wednesday to hold rates steady at a 23-year high, but alluded to the fact that they could start loosening policy as soon as September.
“The labor market’s slowdown is now materializing with more clarity,” said Seema Shah, chief global strategist at Principal Asset Management. “Job gains have dropped below the 150,000 threshold that would be considered consistent with a solid economy… A September rate cut is in the bag and the Fed will be hoping that they haven’t, once again, been too slow to act.”
As for job creation, health care continued to be at the top onboarding 55,000 new workers in July. Other sectors showing notable growth included construction (25,000), the government (17,000) and transportation and warehousing (14,000).
Furthermore, there were some notable job losses last month. Information employment declined by 20,000, while financial activities let go of 4,000 employees.
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