MNI DATA ANALYSIS: July Payrolls Rise 209k; Unemp Rate 4.3%>

--Stronger Than Expected Payrolls Follow +2k Revision To May-June Jobs

By Kevin Kastner, Sara Haire, and Holly Stokes

     WASHINGTON (MNI) - The July employment report released Friday, 

which showed nonfarm payrolls rose by a stronger-than-expected 209,000 

following a net 2,000 upward revision to May-June payrolls, will be 

viewed by many as a sign of strength. 

     The Bureau of Labor Statistics report showed that the unemployment 

rate slipped to 4.3% from 4.4% in June, as expected. The labor force 

rose by 349,000, household employment was up 345,000, and unemployed 

total ticked up by only 4,000. 

     As a result, the labor participation rate rose by 0.1 to 62.9% 

after rising to 62.8% in the previous month. 

     Within payrolls, there were notable gains posted for health care 

(+40k), professional and business services (+50k), and food services and 

drinking places (+53k). Retail trade payrolls were still soft, rising 

only 1,000 in the month, but manufacturing payrolls rose by 16,000. 

     Average hourly earnings rose 0.3% in July, as expected, after a 

0.2% June gain. The 2.5% year/year rate in July the same as in June. 

     The earnings results in this month's report were also in line with 

MNI's Reality Check survey of recruiters released Thursday that showed 

there were signs of wage inflation, especially for jobs where there is a 

shortage of skilled workers. MNI's Vicki Schmelzer wrote that companies 

have been more willing to offer higher salaries to recruit talent and 

raise salaries to prevent skilled workers from leaving. 

     Schmelzer's Reality Check stories also pointed out that hiring was 

particularly strong in July for some industries, as companies started 

their usual fall hiring earlier this year due to anticipated shortages. 

Some companies noted their concerns of losing good workers to companies 

like Amazon, which looked to hire 50,000 new employees in August, a fact 

that should be reflected in next month's employment report. 

     The overall average workweek held steady at 34.5 hours, while 

manufacturing workweek stayed 40.9 hours. 

     The Federal Open Market Committee, in its July 26 statement, again 

pointed out that "job gains have been solid, on average, since the 

beginning of the year and the unemployment rate has declined." Friday's 

report seems to in line with that statement. 

     Also released Friday, the June trade deficit narrowed to $43.6 

billion, smaller than the $44.1b gap expected. The May gap was revised 

slightly smaller to $46.4b from the previously reported $46.5b gap. 

     The BOP goods gap narrowed to $65.2b in June, while the census 

goods gap narrowed to $64.0b, slightly wider than the $63.9b gap in the 

advance estimate. The chained goods gap narrowed to $61.0b from $62.8b 

in May, putting the 2Q average at $62.5b vs $62.3b in 1Q. 

     There were smaller trade gaps with Canada, Mexico, the EU, and 

Japan in June, but a larger deficit with China. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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