Economy adds 164K jobs in July, unemployment holds at 3.7 percent

The U.S. added 164,000 jobs in July, the Labor Department reported Friday, a positive sign amid concerns about the long term health of the economy.

The July jobs report largely met expectations, showing a resilient but slowing labor market. The unemployment rate held even at 3.7 percent, and the labor force participation rate was little changed at 63 percent.

{mosads}The jobs report comes one week after the Commerce Department released data showing a notable slowdown in U.S. growth and sharp declines in business activity. 

While the labor market has rallied through much of those obstacles, the July jobs report showed unmistakable signs of a cooling economy, a potential challenge for President Trump as he seeks reelection.

May’s dismal jobs gain of 72,000 was revised down to just 62,000, while a stellar June jobs gain of 224,000 jobs was cut to a less impressive 192,000 jobs. The 41,000-job reduction dragged down the average monthly gain over the past three months to 140,000 jobs.

The economy also leaned heavily on the service sector for expansion, creating roughly 130,000 jobs, while goods-producing and construction industries stayed largely stagnant.

The manufacturing sector added just 16,000 jobs, remaining largely unchanged, and wage growth has stayed flat since notching 3.2 percent in 2018. The lackluster employment figures follow a decline in U.S. industrial activity since the start of 2019 and a 5.2 percent decline in exports in the second quarter.

“This was a fairly bland report,” said Curt Long, chief economist for the National Association of Federally Insured Credit Unions. “The labor market has cooled since the high-flying days of 2014 through 2016, but it is still strong enough to absorb new entrants and pull a few in from off the sideline.”

After more than a decade of expansion since the 2008 recession, the U.S. economy appears to be settling into the slow-growth trend that emerged before Trump’s election. The U.S. also faces threats from looming recessions in Europe and China, as well as damage from Trump’s trade wars.

The Federal Reserve announced Wednesday it would cut interest rates for the first time since the 2008 financial crisis as insurance against mounting global risks. Fed Chairman Jerome Powell said the cut was due in part over concerns about global trade tensions, which he called an unprecedented challenge for the bank. 

“Trade policy tensions nearly boiled over in May and June but now appear to have returned to a simmer,” Powell said Wednesday.

But Trump turned up the gas Thursday, announcing he would impose a 10 percent tariff on more than $300 billion in Chinese goods on Sept. 1. The targeted imports included hundreds of essential consumer goods, including clothing and household supplies, along with toys and tech products. 

Updated at 11:00 a.m.