Unemployment Rates Dips Slightly to 3.5 Percent
August 7, 2023 – Employment rose by 187,000 in July as the U.S. unemployment rate dropped slightly to 3.5 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 5.8 million in July. Employment continued to trend up in healthcare, social assistance, financial activities, and wholesale trade.
Among the major worker groups, the unemployment rate for Asians declined to 2.3 percent in July. The jobless rates for adult men (3.3 percent), adult women (3.1 percent), teenagers (11.3 percent), whites (3.1 percent), blacks (5.8 percent), and Hispanics (4.4 percent) showed little or no change over the month. Among the unemployed, the number of persons on temporary layoff decreased by 175,000 to 667,000 in July. The number of permanent job losers changed little at 1.4 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million in July and accounted for 19.9 percent of all unemployed persons. The number of persons employed part time for economic reasons, at 4.0 million, changed little in July. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.
“The labor market is cooling ever so slightly each month as the U.S. economy proves resilient to very intense interest rate tightening,” said Jesse Wheeler, a senior economist at the business intelligence company Morning Consult. “There will be a recession at some point, but whether it’s in the immediate term is becoming less and less likely.”
“The unemployment rate has remained low, because we’ve continued to see workers come off the sidelines and find jobs,” said Daniel Zhao, lead economist at the jobs site Glassdoor. “The return of immigration has also been a big factor in supporting labor force growth.”
“What’s really stunning about what’s going on is that we’re seeing gains in some sectors offsetting losses elsewhere,” said Diane Swonk, the chief economist at KPMG US.
Where Job Growth Occurred
• In July, healthcare added 63,000 jobs, compared with the average monthly gain of 51,000 in the prior 12 months. Over the month, job growth occurred in ambulatory healthcare services (+35,000), hospitals (+16,000), and nursing and residential care facilities (+12,000).
• Social assistance added 24,000 jobs in July, in line with the average monthly gain of 23,000 in the prior 12 months. Individual and family services added 19,000 jobs over the month.
Related: CEOs Anticipate a Possible Recession
• Employment in financial activities increased by 19,000 in July. The industry had added an average of 16,000 jobs per month in the second quarter of the year, after employment was essentially flat in the first quarter. Over the month, a job gain in real estate and rental and leasing (+12,000) was partially offset by a loss in commercial banking (-3,000).
• In July, employment in wholesale trade increased by 18,000, after showing little net change in recent months.
• Employment in the other services industry continued to trend up in July (+20,000), compared with the average monthly gain of 15,000 over the prior 12 months. Employment in personal and laundry services continued to trend up over the month (+11,000). Employment in other services remains below its pre-pandemic February 2020 level by 53,000, or 0.9 percent.
Global Hiring Expectations Down for Q3
While temperatures in many countries are heating up, global hiring plans are cooling off heading into summer, according to the latest ManpowerGroup Employment Outlook Survey of nearly 39,000 employers in 41 countries. The net employment outlook is negative four percent lower than this time last year suggesting that economic headwinds are starting to impact employers’ hiring expectations.
“This data suggests employers are planning more measured hiring for the quarter ahead as they navigate a range of local and macro level challenges from supply constraints to uneven consumer confidence and rising inflation,” said Jonas Prising, chairman and CEO. “That said, attracting and retaining business critical talent remains a priority, and our survey respondents around the world continue to be focused on hiring for in-demand roles.”
• Construction employment continued to trend up in July (+19,000), in line with the average monthly gain of 17,000 in the prior 12 months. Over the month, job growth occurred in residential specialty trade contractors (+13,000) and in nonresidential building construction (+11,000).
• In July, employment in leisure and hospitality was little changed (+17,000). The industry has shown little employment change in recent months, following average monthly gains of 67,000 in the first quarter of the year. Employment in leisure and hospitality remains below its February 2020 level by 352,000, or 2.1 percent.
• Employment in professional and business services changed little in July (-8,000). Monthly job growth in the industry had averaged 38,000 in the prior 12 months. Employment in temporary help services continued to trend down over the month (-22,000) and is down by 205,000 since its peak in March 2022. Employment in professional, scientific, and technical services continued to trend up in July (+24,000).
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; retail trade; transportation and warehousing; information; and government.
Related: The Prospect of a Recession Remains Murky
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media
