WASHINGTON (AP) 鈥� The job market has cooled over the summer. But it鈥檚 still strong enough to defy predictions that higher interest rates would tip the United States into recession.
U.S. employers added 187,000 jobs last month, fewer than expected. But the unemployment rate dipped to 3.5% in a sign that the job market remains resilient.
Hiring was up from 185,000 in June, a figure that the Labor Department revised down from an originally reported 209,000. Economists had expected to see 200,000 new jobs in July.
Still last month's hiring was solid, considering that the 11 times since March 2022. And the Fed's inflation fighters will welcome news that more Americans entered the job market last month, easing pressure on employers to raise wages to attract and keep staff.
鈥淭his is a good strong report,'' said Julia Pollak, chief economist at the jobs website ZipRecruiter. 鈥漈he worst fears that people had of a painful downturn, a loss of jobs, longer unemployment durations, all those things 鈥� those are not coming to pass.''
Unemployment fell to a notch above a half century low as 152,000 Americans entered the job force. The number of unemployed fell by 116,000.
Despite the influx of workers, average hourly wages rose 0.4% from June and 4.4% from a year earlier 鈥� numbers that were hotter than expected and are likely to worry the Fed.
The Labor Department revised payroll figures down for both May and June, reducing the number of jobs created in those months by 49,000. With the revisions, June and July were 鈥渢he two weakest monthly gains in two-and-a-half years,鈥欌�� noted Paul Ashworth, chief North America economist at Capital Economics.
In July, health care companies added 63,000 jobs. But temporary help jobs 鈥� often seen as a sign of where the job market is headed 鈥� fell by 22,000. And factories cut 2,000 jobs.
Eugene Lupario, who owns the SVS Group staffing firm in Oakland, California, is seeing signs of a labor market slowdown 鈥� though certain businesses, such as restaurants and bars, are still hiring aggressively. 鈥淚nterest rates have had an impact,鈥欌�� he said. Banks and home lenders have been hit hard by higher borrowing costs and aren鈥檛 looking for much help. 鈥淭hey鈥檙e not getting new loans. They鈥檙e not getting refis,'' Lupario said. 鈥淏ecause rates are where they are, nobody鈥檚 going out there and buying first or second homes right now.鈥欌��
And he said that some of the pandemic hiring frenzy has receded. 鈥淒uring COVID, a nurse, an RN, could ask for and get $100 an hour,鈥欌�� Lupario said. But hospitals are 鈥渘ot paying $100 an hour anymore. They鈥檙e paying pre-COVID rates at $75 to $85 an hour. Those same nurses that were making 100 bucks an hour are sitting on the sidelines maybe waiting for somebody to offer them $100 an hour, not realizing that they鈥檙e probably not going to get it.鈥欌��
The U.S. economy and job market have repeatedly confounded predictions of an impending recession. Increasingly, economists are expressing confidence that inflation fighters at the Federal Reserve can pull off a rare 鈥渟oft landing鈥欌�� 鈥� raising interest rates just enough to rein in rising prices without tipping the world鈥檚 largest economy into recession. too: The Conference Board, a business research group, said that its consumer confidence index last month hit the highest level in two years.
"These numbers,'' acting Labor Secretary Julie Su said after the jobs report came out, "are inconsistent with recession.''
There鈥檚 other evidence the job market, while still healthy, is losing momentum. The Labor Department reported Tuesday that below 9.6 million in June, lowest in more than two years. But, again, the numbers remain unusually robust: Monthly job openings never topped 8 million before 2021. The number of people quitting their jobs 鈥� a sign of confidence they can find something better elsewhere 鈥� also fell in June but remains above pre-pandemic levels.
The Fed wants to see hiring cool off. Strong demand for workers pushes up wages and can force companies to raise prices to make up for the higher costs.
The U.S. labor market 鈥渋s 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,鈥欌�� said Joe Brusuelas, chief economist for the tax and accounting firm RSM. 鈥淒emand for labor remains solid but is clearly cooling compared to the torrid pace in 2021 and 2022.鈥�
Many businesses continue to struggle to find workers.
In New Hampshire, the unemployment rate was 1.8% in June, tied with South Dakota for the nation鈥檚 lowest. 鈥淭he labor market is very tight in this area,鈥欌�� said Jeff Winslow, general manager at DiPrizio Pine Sales, a sawmill in Middleton, New Hampshire, near the Maine border that employs 50 workers and could use a few more. 鈥淭he competition is very difficult to keep up with.鈥欌��
Finding dependable help, Winslow said, is tough. So the mill pays a $1 an hour bonus to workers who complete their scheduled shifts. He looks for workers on job websites. But gesturing at his roadside help-wanted sign, he said: 鈥淢y last four or five good hires have come from this sign. People drive by and they see the sign and they see things going on, and it鈥檚 a small community; so they know someone that works here or has worked here, and they stop by, and we tell them our story.鈥欌��
He said he had just talked to a recent high school graduate about joining the firm, promising to provide training. His pitch: 鈥淥nce you become a skilled employee, we have to pay you to retain-you - or you鈥欌�檒l go up the street to another mill.鈥欌��
Workers at the mill typically earn around $50,000 a year. 鈥淲ithout a good solid workforce,鈥欌�� he said, 鈥測ou don鈥檛 have anything, so you have to pay a competitive wage.鈥欌��
In Goffstown, New Hampshire, Filtrexx Northeast Systems, which makes products that prevent soil erosion, just can鈥檛 find enough people locally. So it relies on foreign workers through the federal government鈥檚 H-2B visa program. 鈥淚f it wasn鈥檛 for that type of program 鈥� with the job market how desperate as it is 鈥� I probably wouldn鈥檛 be here. I鈥檇 probably be out of business or retired or something,鈥欌�� said regional manager David Letourneau.
But even the visas can be a hassle. 鈥淲e need them around April,鈥欌�� Letourneau said. 鈥淲e don鈥檛 get them until June, July. One year we didn鈥檛 get them until October ... I wish I had an answer on the labor market.鈥欌��
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Associated Press video journalist Rodrique Ngowi reported from Middleton and Goffstown, New Hampshire
AP Economics Writer Christopher Rugaber contributed to this report.
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The headline has been corrected to July, not June.
Paul Wiseman And Rodrique Ngowi, The Associated Press
