August 07, 2023 / 08:28 AM IST

Sensex Today | US job growth slowing, but wage gains remain strong

The US economy added fewer jobs than expected in July, but solid wage gains and a decline in the unemployment rate back to 3.5% pointed to continued tightness in labor market conditions.

The Labor Department's employment report on Friday also showed job gains in May and June were revised lower, potentially suggesting demand for labor was slowing in the wake of the Federal Reserve's hefty interest rate hikes.

But with 1.6 job openings for every unemployed person in June, the moderation in hiring may also be the result of companies failing to find workers.

The mixed report did not change growing perceptions among economists that the Fed could engineer a "soft landing" for the economy, though much would depend on the direction of inflation after annual increases in prices slowed sharply in June.

Nonfarm payrolls increased by 187,000 jobs last month, the Labor Department's survey of establishments showed. Data for June was revised lower to show 185,000 jobs added instead of the previously reported 209,000. The job growth in June was the slowest since December 2020.

The economy created 49,000 fewer jobs in May and June than previously reported. Economists polled by Reuters had forecast a gain of 200,000 jobs. Payrolls growth has averaged 218,000 jobs per month over the past three months, a sharp slowdown from the average of 434,000 during the same period last year.