RALEIGH – U.S. employers added 187,000 last month, fewer than expected, as the higher interest rates continued to weigh on the economy. That number could lesson inflation pressure and have an impact on the Federal Reserve’s view on further interest rate hikes.

So says N.C. State economist Dr. Mike Walden.

“This is as close to a ‘perfect report’ as could be hoped for,” Walden tells WRAL News.  “Jobs were added, but at a slower pace, the unemployment rate stayed low, and there were downward revisions in new jobs in both June and May.

“The only troubling number – at least for policymakers – is the still slightly ‘hot’ increase in hourly wages.  The robust wage gain is good for workers, but it does maintain the Fed’s concern about rising labor costs – which feed in to inflation.

“Still, overall, the report is consistent with an economic path for a ‘soft landing’ – meaning reducing the inflation rate without a recession.  For policymakers right now, ‘less is better’ in the labor market.”

Dr. Anne York, an economics professor at Meredith College, concurs.

“[T]his is a good jobs report with solid, but not spectacular growth, that will get us to that soft landing while the Federal Reserve is fighting inflation,” she says.

Jobless rate drops

The unemployment rate dipped to 3.5% in a sign that the job market remains resilient.

Hiring was up from 185,000 in June, a figure that the Labor Department revised down from an originally reported 209,000. Economists had expected to see 200,000 new jobs in July.

Still last month’s hiring was solid, considering that the Federal Reserve has raised its benchmark interest 11 times since March 2022. And the Fed’s inflation fighters will welcome news that more Americans entered the job market last month, easing pressure on employers to raise wages to attract and keep staff.

Unemployment fell as 152,000 Americans entered the job force. The number of unemployed fell by 116,000.

Despite the influx of workers, average hourly wages rose 0.4% from June and 4.4% from a year earlier – numbers that were hotter than expected and are likely to worry the Fed.

Unemployment claims drop; analysts expect 200,000 new jobs in July report

The Labor Department revised payroll figures down for both May and June, reducing the number of jobs created in those months by 49,000.

In July, health care companies added 63,000 jobs.

The U.S. economy and job market have repeatedly defied predictions of an impending recession. Increasingly, economists are expressing confidence that inflation fighters at the Federal Reserve can pull off a rare “soft landing’’ – raising interest rates just enough to rein in rising prices without tipping the world’s largest economy into recession. Consumers are feeling sunnier too: The Conference Board, a business research group, said that its consumer confidence index last month hit the highest level in two years.

There’s other evidence the job market, while still healthy, is losing momentum. The Labor Department reported Tuesday that job openings fell below 9.6 million in June, lowest in more than two years. But, again, the numbers remain unusually robust: Monthly job openings never topped 8 million before 2021. The number of people quitting their jobs – a sign of confidence they can find something better elsewhere – also fell in June but remains above pre-pandemic levels