REPEAT: MNI DATA ANALYSIS: US July Payrolls +157k, 3.9% Rate>

Repeats Story Initially Transmitted at 12:30 GMT Aug 3

--Drop in Unemployment Rate Reflects Reversal In Household Unemployed

--Hourly Earnings +0.3% After +0.1% in June, Y/Y Rate Stays At 2.7%

--Participation Rate Holds Steady At 62.9%

By Kevin Kastner, Sara Haire, and Shikha Dave

     WASHINGTON (MNI) - The July employment report released Friday 

showed the nonfarm payrolls gain was smaller than the 190,000 increase 

expected by analysts and the 204,000 gain expected by the whisper 

number, rising 157,000 after a net upward revision of 59,000 in the 

previous two months, data released by the Bureau of Labor Statistics 

showed. 

     However, the unemployment rate slipped to 3.9% in July from the 

4.0% rate posted in June and hourly earnings were up a solid 0.3%, 

adding some complexity to the data below the headline number. 

--UNEMPLOYMENT RATE DECLINE TO 3.9%

     Analysts had expected the unemployment rate to decline slightly to 

3.9% after rising to 4.0% in June. When seen unrounded, the July rate 

fell to 3.871%, so on the low end of 3.9%. The labor force participation 

rate held steady at 62.9%. 

     The labor force rose by 105,000 after a 601,000 gain last month. 

Household employment rose by 389,000 in July, while the number of 

unemployed fell by 284,000 after a 499,000 June surge. 

--HOURLY EARNINGS AS EXPECTED

     Average hourly earnings rose 0.3% in July after a downward revised 

0.1% rise in June. Before rounding, July hourly earnings were up 0.259%, 

on the low side of 0.3%. 

     Hourly earnings now stand 2.7% above its year ago level, the same 

as in June after rounding. Before rounding, the year/year rate slipped 

to 2.696% from 2.742%. Wage growth is still lagging behind levels 

usually seen with this tight of a labor market. 

     The overall average workweek fell to 34.5 hours from 34.6 hours in 

the previous month. The combination of earnings and hours worked should 

be offsetting factors for personal income growth in July. 

--RETAIL PAYROLLS STILL SOFT 

     Private jobs were up 170,000, softer than the 202,000 gain 

expected. Within payrolls, there were solid gains for business and 

professional services, leisure and hospitality, manufacturing, and 

health care. 

     However, retail payrolls were up only 7,000 in July after falling 

by 20,000 in June. In addition, there were payrolls declines for the 

utilities, mining, and transportation and warehousing sectors, which 

could impact the industrial production data in the month. 

--WIDER TRADE GAP 

     Also released Friday, the international trade gap widened to $46.3 

billion in June from $43.2 billion in May, slightly larger than the 

$46.1 billion gap expected. The census goods gap was revised to $67.9 

billion from the $68.3 billion gap reported in the advance estimate. 

     The data suggest some impact from the tariffs that were implemented 

in June, as exports declines in the month after rising in June as U.S. 

businesses stocked up ahead of the tariff implementations. 

     Exports of consumer goods, capital goods, and autos all declined in 

the month, offset by an energy-related jump in industrial supply 

exports. 

     Imports posted another increase in June, led by consumer goods and 

industrial supplies, but capital goods imports declined. 

     The price of imported crude oil was the highest in over three 

years, though the seasonally adjusted petroleum goods balance actually 

narrowed slightly in the month as seasonal factors expected some of the 

price gain. 

     The unilateral trade gaps with China, Canada, and Mexico, the 

targets of recent tariff activity, all widened in June from May, and all 

three were larger than their year ago levels. 

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