Hiring Expected to Pick Up in July, but Wages Are Barely Keeping Up
Economists surveyed by Dow Jones expect the Bureau of Labor Statistics to report 83,000 jobs added last month, with unemployment steady at 4.2% and inflation still running at 3.5%.
The Bureau of Labor Statistics is scheduled to release its nonfarm payroll report for July at 8:30 a.m. ET, and forecasters expect it to show a modest acceleration in hiring alongside stagnant wages.
Economists surveyed by Dow Jones project 83,000 jobs added, up from June's 57,000, with the unemployment rate holding at 4.2%.
The report lands against a complicated backdrop. The U.S. war with Iran continues without an agreement to fully reopen the Strait of Hormuz, keeping energy prices elevated even after retreating from the year's highs. Regular gasoline averages $4.06 a gallon, up 36% since Feb. 28. Inflation stands at 3.5%, well above the Federal Reserve's 2% target.
"Average hourly earnings are expected to rise 0.3%, which will boost wages 3.5% from a year ago," said Diane Swonk, chief economist at KPMG. "That is the same as June and suggests that the cooling we had seen in wages may be hitting a trough." She added: "The challenge is inflation, which after a brief reprieve in June, accelerated again in response to the conflict in the Middle East." Wage growth fell below the rate of inflation in April and May.
Swonk expects an above-consensus 100,000 jobs, writing that "firms are beginning to loosen their purse strings and hire again." Bank of America economist Shruti Mishra projects 80,000, saying a report in line with that forecast "would signal a healthy labor market." Mishra expects education and health services to lead again, with leisure and hospitality possibly rebounding after June's 61,000 decline, which she attributed to seasonal distortions.
Manufacturing survey data showed factory employers hiring for the first time since September 2023. PNC chief economist Gus Faucher noted manufacturing payrolls have risen in four of six months this year, a gain of just 18,000, and called the labor market "solid."
A strong report could set the stage for a Fed rate hike as soon as September; futures markets put those odds above 50%. Fed Chair Kevin Warsh has stressed a focus on price stability.
Not everyone expects strength. Vanguard senior economist Adam Schickling forecasts 18,000 jobs, citing the firm's 401(k) data covering about 5 million workers, which showed "near-zero employment growth in July."
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.