The United States’ headline unemployment rate dropped to 3.9 per cent in July, a month in which nonfarm payrolls in the world’s largest economy rose by 157,000, the Labour Department said on Friday. The US economy remains close to full employment even though the number of jobs added last month was below the 195,000 forecast by economists, Efe reported. US employment has risen for 94 consecutive months, the longest jobs-expansion streak on record. The unemployment rate has now dipped below 4 per cent for the third time this year.
The jobless rate unexpectedly climbed to 4 per cent in June – up from 3.8 per cent in May, the lowest level since 2000 – mainly because more people were actively looking for work. Average hourly wages for all employees on private nonfarm payrolls rose in July by $0.07 to $27.05; average hourly earnings climbed 2.7 per cent relative to July 2017, and economists expect labour costs to keep rising. The US labour force participation rate (the share of the population 16 years and older either working or seeking work), which peaked at 67.1 per cent in 2000, remained unchanged from the previous month at 62.9 per cent.
“The unemployment rate edged down to 3.9 per cent. This is only the eighth time that the monthly unemployment rate has fallen below 4.0 per cent since 1970, and three of those months happened under President (Donald) Trump in 2018,” US Labour Secretary Alexander Acosta said in a statement on the July jobs report. “There is a record 156 million people in the labour force. Since President Trump’s election, more than 1 million prime-age people joined or rejoined the labor force. For the second consecutive month, the unemployment rate for Hispanics reached a record low,” the statement added.
Following this latest solid jobs report, it remains likely that the US Federal Reserve will hike interest rates two more times in 2018. The Fed has already raised its federal-funds rate twice this year, with that benchmark rate currently set at a range of between 1.75 per cent and 2 per cent.