This isn’t exactly a reason to panic, but the pace of U.S. job growth definitely seems to have slowed a bit.
The Bureau of Labor Statistics announced on Friday that employers added 164,000 workers to their payrolls in July, while cutting its estimates from May and June. For all of 2019, the country is now averaging 165,000 new jobs per month, basically a solid pace, but significantly below last year’s rate of 223,000 new jobs per month. The market looks a bit more like it did in 2017, before the economy got a jolt of stimulus from the Republican tax cut and federal spending hikes.
Here’s what the slowdown looks like over time, using the three-month rolling average of job growth, which smooths out some of the noise.
This month’s jobs report contained other signs that the labor market is starting to stall. The employment rate among Americans in their prime working years (which I generally consider to be a better gauge of the job market that the official unemployment rate) fell to 79.5 percent. After years of steadily climbing since the recession, it has been gradually dipping since January.
Slowing job growth and a flattening employment rate could, in theory, just be signs that we have reached full employment, meaning that more or less everybody who wants a job has one and businesses are having trouble finding workers. But in that scenario, you would expect wage growth to be accelerating. And it’s not. After rising through 2018, it’s now stuck just above 3 percent, year over year.
Overall, the economy still seems to be more or less healthy for the moment. Jobs are growing steadily, wages are going up, and the prime employment rate is close to where it was in 2007, before the Great Recession sent everything straight to hell. But on top of last week’s somewhat disappointing economic growth report, these numbers seem to be another sign of softening. Maybe this isn’t the greatest moment for more tariffs?