Advertisement

SKIP ADVERTISEMENT

Job Growth Slows in July but Remains Solid

The figures suggest the economy is cooling but employers are still pulling in workers from the sidelines.

In a week when President Trump suddenly cranked up trade tensions with China and the central bank moved to counter economic uncertainties, the American labor market offered a comforting steadiness.

Employers added 164,000 jobs in July, the Labor Department reported Friday, continuing a record hiring streak and keeping a tight lid on the unemployment rate.

Payroll gains have clearly slowed since last year, when steep tax cuts and government spending revved up the economy. But more than 10 years into an economic expansion, a little cooling is expected.

“Job gains were fairly broad-based across different sectors,” said Gregory Daco, chief economist of Oxford Economics USA. “This was a good jobs report over all.”

The monthly report reinforced the Federal Reserve’s stance that the economy’s underpinnings remain strong, even though it is unlikely to temper the push from some investors and Mr. Trump for the central bank to further reduce interest rates. On Wednesday, the Fed dropped its target rate for the first time in a decade.

Anxiety about the economy stems less from the country’s job-creation abilities than from concerns about a global slowdown, trade tensions, muted inflation and the risk of tightening financial conditions.

Mr. Trump ratcheted up those concerns on Thursday by announcing he intends to impose a 10 percent tariff on an additional $300 billion worth of Chinese imports. Beijing has promised to retaliate.

“Trump is trying to kill two birds with one stone: getting China to accept any type of trade deal and pushing the Fed to cut rates,” Mr. Daco said. “It’s like shooting yourself in the foot just to get another dose of morphine. It’s not a good approach.”

Image
Martin Espinosa inspected a truck and refueled it at the Doral Ryder location in Miami.Credit...Maria Alejandra Cardona for The New York Times

Tariffs and trade conflicts are likely responsible for the recent slowdown in manufacturing. But their impact has not yet trickled down to the rest of economy. The national unemployment rate is 3.7 percent, and confident consumers are still snapping open their wallets, and employers are searching for more workers.

“I’m never at full employment,” said Frank Lopez, executive vice president and chief human resources officer for Ryder System, which has 800 locations throughout North America.

Explosive growth over the past five years has increased his company’s appetite for skilled workers, particularly drivers and diesel mechanics. “I’m looking for 400 to 500 drivers at any given time,” he said.

To cope, the truck leasing, maintenance and logistics company has stepped up its efforts to develop its own talent pool, looking to recruit students right out of high school and service members finishing up military tours. It has established a partnership with Women in Trucking, a trade association, to attract more women to the industry.

“Someone can start out pumping fuel and washing trucks and become a trained mechanic,” Mr. Lopez said.

The tight job market is continuing to pull in workers from the sidelines. The labor force participation rate of African-American teenagers, for example, rose last month. Diane Swonk, chief economist at Grant Thornton, cited the improvement as evidence that the recovery is “finally getting into some parts of the economy that were left behind.”

She also noted a jump in the number of child and home health care workers, which can clear the way for more people to go to work.

A broader measure of unemployment that includes part-timers who would prefer to work full time and those too discouraged to job hunt dropped to 7 percent in July, the lowest rate since 2000.

New entrants to the work force may have helped tamp down wage growth. Average hourly earnings rose 0.3 percent in June and July, bringing the year-over-year increase to 3.2 percent.

Those at the lower end of the pay scale have benefited the most from employers’ scrimmage for workers. Still, pay increases seem outpaced by employers’ complaints about labor shortages.

Ask pretty much any general contractor, hospital leader or restaurant owner about his or her biggest headaches, and a lack of qualified workers comes up.

“Ten percent of our positions are always open,” said Ignacio Garcia-Menocal, a co-founder and chief executive of Grove Bay Hospitality in Miami, which operates several celebrity-chef restaurants and employs 450 people.

With two restaurants opening soon, Mr. Garcia-Menocal said he was looking to hire 40 to 50 people, from dishwashers who start at $10 an hour to general managers, whose salaries can range from $70,000 to $90,000 a year.

The competition for workers is intense, Mr. Garcia-Menocal said during a lunchtime shift at Root & Bone in Coral Gables, Fla.: “Somebody will jump to a place next door for a dollar.” He said that his company had also raised wages but that profit margins in the restaurant business were too slim to go much higher.

Grove Bay has dangled other incentives before its employees, including management training, health insurance and a paid monthlong sabbatical for those who have been with the company for seven years. The company regularly holds events for employees where prizes like iPhones, televisions and $1,000 gift cards are raffled off, Mr. Garcia-Menocal said.

He is also closely watching how Shake Shack’s experiment with a four-day workweek in some locations goes.

A survey of business owners last month by the National Federation of Independent Business found job creation remains at a historically high level.

“We’re seeing it across the economy: Companies are hiring across industries, from data analysts to delivery drivers,” said Becky Frankiewicz, president of ManpowerGroup North America. “I meet with C.E.O.s across the country on a regular basis, and they say they can’t find the skilled workers they need.”

The low unemployment rate has helped Mr. Trump make the case that the economy’s growth is one of his signature achievements, an argument that is expected to be a cornerstone of his 2020 re-election strategy.

Democratic presidential candidates, by contrast, have tended to skip over the labor market when looking for the economy’s soft spots, pointing instead to mediocre wage increases, growing levels of household debt, yawning inequality, slowing growth and rising trade tensions.

During the Democratic debates this week, Senator Bernie Sanders of Vermont, for example, said Americans were “living paycheck to paycheck” and denounced profitable corporations that avoided paying taxes.

Last month, Senator Elizabeth Warren of Massachusetts posted an essay on Medium warning of “the coming economic crash” and the “economy’s shaky foundation.”

It is a strategy that Mr. Trump successfully used himself during the 2016 campaign. Although the jobless rate dropped sharply and millions of jobs were created during President Barack Obama’s tenure, Mr. Trump hammered away at the economy’s feeble spots, highlighting job losses in manufacturing and dismissing the government’s job reports as phony.

Even with the jobless rate now at a half-century low, the expansion remains uneven, and many Americans who are employed say they lack economic security and stability.

Senator Kamala Harris of California has accused the president of breaking his promises to farmers and autoworkers.

And Julián Castro, a housing secretary in the Obama administration, declared from the debate stage that “the idea that America is doing just fine is wrong.”

“There are a lot of Americans right now that are hurting,” he said. “Just go and ask the folks that just received notice that they’re getting laid off by General Motors.”

Automobile workers at the General Motors plant in Warren, Mich., clocked their last hours last week as the plant ended production. And car sales have been slipping nationwide.

Last month, the economy created 16,000 new manufacturing jobs, but the total number of hours worked in the sector declined.

Jobless rates vary wildly depending on location. In several metropolitan areas, including New Orleans and Flint, Mich., the unemployment rate lingers above the national average.

Retailers also continued to struggle, cutting jobs in July, the sixth month in a row. The mining sector contracted as well, probably because of lower oil prices.

July’s estimates will be revised twice more as the Labor Department collects new information. Revisions to previous reports shrank job gains in prior months by 41,000.

So far, the monthly average for the last three months is 140,000, compared with 223,000 in 2018.

But the labor market’s energy is still on display. Restaurants, business services, health care and education all posted solid gains. And as long as employers increase their payrolls by roughly 100,000 each month, job creation can keep pace with population growth.

“The trend is still strong enough to keep unemployment down,” said Jim O’Sullivan, chief economist at High Frequency Economics. “If the economy is truly weakening sharply, jobless claims should be going up and that hasn’t happened so far.”

Patricia Cohen covers the national economy. Since joining The Times in 1997, she has also written about theater, books and ideas. She is the author of “In Our Prime: The Fascinating History and Promising Future of Middle Age.” More about Patricia Cohen

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: U.S. Hiring Streak Goes On As Tariffs Gnaw at Factories. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT