US employers add a still-solid 187,000 jobs in July; unemployment dips to 3.5%

WASHINGTON (AP) — The job market has cooled over the summer. But it's still strong enough to defy predictions that higher interest rates would tip the United States into recession.

US employers added 187,000 jobs last month, fewer than expected. But the unemployment rate dipped to 3.5 per cent 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.

"This is a good strong report,'' said Julia Pollak, chief economist at the jobs website ZipRecruiter. "The worst fears that people had of a painful downturn, a loss of jobs, longer unemployment durations, all those things — those are not coming to pass.''

Unemployment fell to a notch above a half century low 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 per cent from June and 4.4 per cent from a year earlier – numbers that were hotter than expected and are likely to worry the Fed.

The Labor Department revised payroll figures down for both May and June, reducing the number of jobs created in those months by 49,000. With the revisions, June and July were "the two weakest monthly gains in two-and-a-half years,'' noted Paul Ashworth, chief North America economist at Capital Economics.

In July, health care companies added 63,000 jobs. But temporary help jobs – often seen as a sign of where the job market is headed – fell by 22,000. And factories cut 2,000 jobs.

The Fed wants to see hiring cool off. Strong demand for workers pushes up wages and can force companies to raise prices to make up for the higher costs.

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