By James Myers, OAN Staff
Friday, August 2, 2024 7:56 AM
U.S. job growth slowed more than expected in July and the unemployment rate rose to 4.3%, raising concerns that the labor market is stagnating and the economy could tip into recession.
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The Labor Department’s Bureau of Labor Statistics said Friday that payrolls rose by 114,000 in July, below economists’ expectations of a rise of 175,000. The unemployment rate also rose to 4.3%, contrary to expectations that it would remain steady at 4.1%.
The latest report puts the unemployment rate at its highest level since October 2021.
“Temperatures across the country may be high, but the heatwaves of summer haven’t hit the job market,” said Becky Frankiewicz, president of ManpowerGroup North America. “The blanket cooling has wiped out much of the gains we saw from the first quarter of the year.”
The unemployment rate is expected to remain stable at 4.1%, according to a survey of economists by the data firm. FactSet.
The latest numbers also had an impact on Wall Street on Friday morning, with Dow futures dropping more than 300 points in the hour before the open of trading.
Meanwhile, the unemployment rate over the past three months averaged 4.13%, 0.63 percentage points higher than July 2023’s rate of 3.5%.
“The latest labor market developments are consistent with an economic slowdown, not necessarily a recession,” said Jeffrey Roach, chief economist at LPL Financial Inc. “But early warning signs point to further weakness.”
The figures also raised warnings that the Federal Reserve may have waited too long to cut interest rates. Lawmakers voted Wednesday to keep rates at their highest in 23 years but signaled they could start easing policy as early as September.
“The labor market slowdown is now more evident,” said Seema Shah, chief global strategist at Principal Asset Management. “Job gains fell below the 150,000 mark that’s considered consistent with a robust economy. A September rate cut is a certainty, and the Fed will hopefully not be slow to act this time around.”
Healthcare continued to lead the way in terms of job creation, adding 55,000 new workers in July. Other sectors that saw notable growth included construction (25,000), government (17,000), and transportation and warehousing (14,000).
Additionally, there were notable job losses last month, with information-related employment falling by 20,000 and the financial services sector losing 4,000 employees.
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