US adds lower-than-expected jobs in July as labor market cools

The U.S. labor market "is now cooling in a gradual and orderly fashion in line with the policy goals at the Federal Reserve, which points to a growing probability of a soft landing for the economy."

(Xinhua) -- U.S. employers added 187,000 jobs in July, lower than expected, according to the latest report released by the U.S. Bureau of Labor Statistics on Friday.

The figure, slightly below the market's expected 200,000, showed a sign that the labor market is cooling after a series of interest rate hikes by the Federal Reserve have driven rates to their highest level in 22 years.

People cool themselves under a water cooling station at the Smithsonian National Zoo in Washington, D.C., the United States, July 26, 2023. (Photo by Aaron Schwartz/Xinhua)

July's gains were just 2,000 more than the jobs added in June, the report suggested. Health care, social assistance, financial activities and wholesale trade were the leading sectors for job creation.

The number for June was revised down to 185,000 from 209,000, while May's figure was reduced by 25,000 to 281,000, meaning fewer jobs were created in the spring than initial estimates, according to official data.

With the revisions, June and July represented "the two weakest monthly gains in two and a half years," noted Paul Ashworth, chief North America economist at Capital Economics.

The unemployment rate fell to 3.5 percent last month, down from 3.6 percent in June.

The data also showed wage gains continued to outpace inflation.

Average hourly wages, a key gauge closely observed by the Fed, rose 0.4 percent in July from June and 4.4 percent from a year earlier, in a sign that was hotter than expected and are likely to worry the Fed.

In the second quarter, average hourly wages rose 4.5 percent compared to a year ago. But the pace of rises slowed from 4.8 percent in the previous quarter.

The U.S. labor market "is now cooling in a gradual and orderly fashion in line with the policy goals at the Federal Reserve, which points to a growing probability of a soft landing for the economy," said Joe Brusuelas, chief economist at the tax and accounting firm RSM.

"Demand for labor remains solid but is clearly cooling compared to the torrid pace in 2021 and 2022," he said in a note.