The US economy continues to produce more jobs despite being close to full employment. The unemployment rate has remained at or under 4% since April 2018 while annual increases in hourly pay have remained above 3% for ten consecutive months. This latest employment report has provided more of the same, even as the US Fed has cut the federal funds rate target and various economic surveys hint at a coming slowdown.
According to the US Bureau of Labor Statistics, the US economy created an additional 164,000 jobs in the non-farm sector in July, less than June’s revised increase of 193,000 but broadly in line with the 160,000 increase which had been expected by economists. However, previous two month’s figures were revised lower by a total of 41,000.
The unemployment rate remained unchanged at June’s revised rate of 3.7% as the total number of unemployed increased by 88,000 to 6.063 million while the total number of people either employed or looking for work increased by 371,000 to 163.35 million.
US bond yields fell on the day, not because of the non-farm numbers but as a result of the Chinese response to the Trump Administration’s tariff announcement of the previous day. By the end of the day, 2-year Treasury bond yields had shed 2bps to 1.71%, 10-year yields had lost 5bps to 1.85% and 30-year yields were 6bps lower at 2.38%.