The Bureau of Labor Statistics (BLS) released its monthly Current Employment Statistics (CES) report and Current Population Survey (CPS) for July 2023 on Friday, August 4th. The monthly change in employment given by the CES and the unemployment rate from the CPS are seen as the standard gauges for assessing the health of the U.S. labor market.
Employment in the U.S. rose by 187,000 jobs. The job results were below the Geographic Solutions, Inc. forecast of 244,000 while the WSJ estimate was closer at 200,000. Geographic Solutions, Inc. derives its employment forecast from internal data on the number of job openings, job applications, job severances, and unemployment applications filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).
The unemployment rate fell to 3.5%. The Geographic Solutions forecast matched the 3.5% result and outperformed the WSJ estimate of 3.6%. The unemployment rate forecast uses internal data on the number of job openings, job severances, and unemployment applications filed on Geographic Solutions state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor.
Job creation was strongest in the Education & Health Services (100,000) sector. Other sectors were modestly positive, but the Manufacturing, Information, and Professional & Business Services industries lost jobs.
Leisure & Hospitality and Government are the only major sectors to remain below their pre-pandemic employment levels.
Labor force participation maintained its 62.6% rate for the fifth consecutive month. The more expansive U-6 unemployment rate counts discouraged workers who are no longer actively seeking work (and therefore no longer in the labor force) and those that have settled for part-time employment but desire a full-time job. This measure of unemployment declined to 6.7%.
Looking at employment over the last year, it appears that the Fed’s interest rate policy has had a moderate effect on the labor market. With the exceptions of January and May 2023, job growth has been on a slight glide path to end up under 200,000 in June and July. Education & Health Services has led the way in job increases for the second straight month and made up most of new jobs in July. This might be due to seasonal factors that have changed in the post-pandemic era and will require consideration for any yo-yo effects that might occur in the coming months. The near-term prognosis for the labor market is likely sub-200,000 monthly job growth as the Fed’s interest rate hike continued to work their way through the economy.