By Thomas Cooley and Peter Rupert
So, forecasts by economists for July employment ranged between 350,000 and 1.2 million. I am pretty sure we have never before seen such a wide discrepancy in forecasts, just saying what crazy times we are living in. The BLS announced that July employment rose by 943,000 with 703,000 coming from private employment and 240,000 coming from the government. The gains were widespread with only retail trade showing a meaningful decline of 5,500. Although the economy continues to improve there is still a bit of a way to go. Employment is still about 5.7 million below the pre-pandemic high. Initial claims remain elevated but continued claims fell to a new post-pandemic low.
Average hours of work were strong at 34.8 and last month’s hours were revised up from 34.7 to 34.8 as well, so that aggregate hours increased by about 0.6%. Average hourly earnings increased from $30.43 to $30.54, 0.36% over the month and 4.4% annualized. Unfortunately the CPI year over year outpaced the average hourly earnings year over year and so real earnings have fallen.
The household survey showed a 1,043,000 rise in those employed and a 261,000 increase in the labor force. There was a 782,000 drop in the number of people unemployed. All of this leading to a decline in the unemployment rate from 5.9% to 5.4%, the lowest rate seen since the onset of the pandemic.
Of course it remains to be seen how the newest Corona variants will spread, however we are already seeing increased public health concerns and new mask requirements in place. Such risks will make it even more difficult to forecast where the economy might be several months from now.