WASHINGTON – The U.S. government is expected to issue another solid jobs report Friday — and if it does, it would ease concerns that the economy is struggling.
Economists have forecast that employers added 175,000 jobs in July and that the unemployment rate dipped to 4.8 per cent from 4.9 per cent in June.
That level of job growth would be in line with this year’s average monthly gains, which remain below last year’s healthy pace of about 230,000. Despite the downshift, an increase of 175,000 would likely be enough to reassure investors — and perhaps Federal Reserve policymakers — that the economy will keep growing at its slow but steady pace.
The economy slumped in the first half of this year, with an annualized growth rate of just 1 per cent. Growth has been powered by consumers, who ramped up spending in the April-June quarter at the second-fastest pace since the recession.
That figure underscored the importance of strong hiring, which puts more paychecks into more pockets and supports greater spending. Many analysts expect the economy to rebound in the second half of the year, with one of the most optimistic estimates coming from the Federal Reserve Bank of Atlanta: It predicts that annualized growth will reach 3.7 per cent in the current July-September quarter.
Solid hiring in July would confirm that a sharp fall-off in hiring during May was only temporary. Job gains have swung sharply in recent months, from a meagre increase of 11,000 in May to an explosive gain of 287,000 in June.
Still, the jobs report isn’t likely to alter public perceptions of the economy, which have been largely negative during this election season despite low unemployment. A top adviser to Donald Trump said last week that the annual economic growth rate of just 1.2 per cent in the April-June quarter was “catastrophic.”
Hillary Clinton has tended to credit the Obama administration for rescuing the economy from the Great Recession but has also said “none of us can be satisfied with the status quo.”
Overall, most recent economic data have been mixed. Americans are confident enough to step up home purchases, aided by near-record-low mortgage rates. Sales of existing homes reached a nine-year high in June, and sales of new homes accelerated to an eight-year high.
Services companies, which range from retailers to banks to shipping firms, expanded at a healthy pace in July, according to a survey by the Institute for Supply Management, a trade group. Their expansion slowed a bit from the previous month. But new orders picked up, a sign that growth could remain healthy.
But manufacturing continues to struggle and is weighing on hiring. Factories received fewer orders in June for a third straight month. Weak growth overseas and a stronger dollar have cut into many companies’ overseas businesses. And auto sales have levelled off, according to data released this week.
The slowdown in manufacturing has cost jobs: Factory employment has fallen about 30,000 in the past year, depriving the economy of key middle-income positions.
Job growth has been stronger in higher-income occupations, such as managers, engineers and accountants. Lower-wage jobs at hotels, restaurants and retail stores have also grown at a healthy pace. Both trends add to a long-running dynamic that has caused hiring for middle-income jobs to lag behind hiring for high- and low-paying positions.