The Monday Moneybeat: New jobs

MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.

NICK EICHER, HOST: American employers added 164,000 new jobs in July. And the nation’s unemployment rate remained unchanged at 3.7 percent. Government economists reported those figures and then reported further that they had overstated job gains in May and June, so they lowered those numbers accordingly.

So now taken together, we have a half-year average of 141,000 jobs added per month for all of 2019. That compares a bit unfavorably with the same six months last year, when the average was 236,000 per month. 

But with an unemployment rate near a 50-year low point, we’ve gotten to that place labor economists call full employment. In other words, it’s not so easy to fill those new jobs. The labor market is tight and so the law of supply and demand is driving wages higher. Average hourly earnings were greater in July, 3.2 percent greater than in 2018, to be precise.

But the more impressive statistic is that growth in lower-skill, lower-pay positions is driving the bulk of the overall gain. Those jobs are paying almost 5 percent better year on year.

REICHARD: American manufacturing is still growing, but it is slowing. According to the Institute for Supply Management, July results make 35 straight months of growth. 

The private-sector group publishes a manufacturing index where any number above 50 indicates growth, or below 50 indicates contraction. In July it was 51.2 and although positive, it’s been tapering down now for four consecutive months.

EICHER: There’s a saying in the field of economics that economic expansions don’t die of old age, but rather that central banks kill them. The Federal Reserve is our central bank, and Fed chairman Jay Powell seems to know the old saying. It probably explains why he’s consistently explaining fed policy actions as aimed at preserving the expansion, now the longest in history—or, to continue the metaphor, the most elderly.

Last week, the Fed agreed to cut interest rates by a quarter percentage point—in Powell’s words, as insurance against downside risk to the economy. 

Mark Hamrick, senior economic analyst, Bankrate.com, says Powell was referring to three risks.

HAMRICK: The Fed is seeing a number of signs on the horizon that are related to slowing global growth, rising trade tensions, not only with the U.S. and China but around the world, and it’s also failed to hit its much-discussed 2 percent inflation target. Inflation’s been running below a level that the Fed is comfortable with.

But Powell also called the move a “mid-cycle adjustment,” and seemed to be tamping down expectations of more cuts ahead.

REICHARD: On Wall Street, traders seemed to desire more cuts ahead, and they reacted to the Fed with the biggest selloff of the year: The Standard & Poor’s 500 index of stocks had its worst week of 2019 and it came just seven days after hitting its current record high. 

All the major indexes were down for the week: The S&P 500 off 3.1 percent. The Dow Jones Industrial Average down 2.6. The Nasdaq lost 3.9 percent and the Russell 2000 dropped 2.9.

EICHER: And that is today’s Monday Moneybeat.

(AP Photo/Rogelio V. Solis, File) In this June 21, 2019, file photo a now hiring sign is displayed to attract potential workers at a McDonald’s restaurant in Moss Point, Miss. 

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