The month of July kept up the job growth pattern, posting 164,000 hirings, but some economists reported that there is a major slowdown under way in the creation of jobs for making things: manufacturing, mining and construction.
The week that sped through July and dropped into August included a Federal Reserve interest rate cut and an escalation in the trade war with China.
The forecast of 163,000 jobs was really close and the unemployment rate was unchanged, at 3.7%.
Workers’ wages rose 0.3% in July and are up 3.2% over the last year, which represents neither a major acceleration nor deceleration. Annual wage growth has been either 3.1% or 3.2% for all but one month of 2019.
The disappointing “goods-producing” sectors, as Labor Department classifications call them, added an average of 58,000 jobs a month in 2018. That is now down to 23,000 a month thus far in 2019 — and a mere 15,000 in July.
The culprits include:
• Probably, the trade war, directly and indirectly. Many manufacturers have cited trade as a reason for slower growth, in surveys and in conference calls with investors and the numbers support the idea that they have been more cautious.
• The strength of the dollar on international currency markets has perhaps contributed as well, by making American exporters less competitive.
• The manufacturing sector added 16,000 jobs in July, but that is down from 22,000 per month in 2018, and the sector has averaged only 8,000 a month so far in 2019.
• Prices for oil and other commodities have fallen in recent months, contributing to the drop in mining jobs — down 5,100 in July alone (The category includes oil and gas extraction, as well as “support activities” for mining). This, also, is tied to broader trends, as the trade wars have caused slower world economic growth and thus driven down commodity prices.
• Weak growth in construction jobs. A mere 4,000 added in July alone, compared with an average of 26,000 each month in 2018. The numbers reflect a softening housing market and weak investment by business in new structures. By the way, when are we going to begin firing up those numerous infrastructure projects promised in the 2016 campaigns?
The good news for these sectors is that the Feds push toward lower interest rates should help. The effects of interest rate cuts are, in theory at least, closely tied to these industries.
According to Democrats, the bad news for workers in these goods-producing industries is that the Trump administration appears inclined to use the breathing room created by the Fed as leverage for a new round of tariffs on China, as the president tweeted on Aug. 1.
The nation needs to improve the job numbers in August and beyond.