U.S. Adds 187,000 Jobs in July, Unemployment Rate Fell to 3.5%

The U.S. labor market continues its resilience in July with U.S. employers adding 187,000 workers in July, lower than expected. The ADP Employment Report for July (actual 324,000; consensus 190,000) released a day ahead of the BLS employment report. The ISM services employment index rose to 50.7 vs 53.1 prior. Expectations ranged between +140K and +300K nonfarm payroll jobs added, with a consensus estimate for 200K. June’s employment gain was revised down by 25,000, from +306,000 to +281,000.

Wage gains exceed both their pre-pandemic pace and what Fed officials would likely see, 3.5% annual wage growth consistent with inflation near their 2% target, assuming that worker productivity grows modestly.


The unemployment rate fell to 3.5% in July from 3.6% in June, indicating the labor market remains tight. Wages grew 4.4% in July from a year earlier.

The resiliency of the labor market continues to raise the odds of further tightening from the Federal Reserve. Ahead of the report, after the ADP Report according to the CME FedWatch Tool:

July 2023 US Employment Report

July 2023 US Employment Report and Expectations

The jobless rate was 3.5% in July the Labor Department reported Friday. The unemployment rate is back at the pandemic rate of 3.5%, which was a 50-year low. (This was bettered in Jan at 3.4%) The job market is still tight, with the national unemployment rate hovering near half-century lows.

US Jobs Report



  • Change In Nonfarm Payrolls July: 187K (exp 200K; prev 209K)
  • Unemployment Rate July: 3.5% (exp 3.6%; prev 3.6%)
  • Labour Force Participation Rate July:  62.6% (exp 62.6%; prev 62.6%)
  • Prior two-month net revision July:  -49K vs -6K prior
United States Unemployment Rate

The unemployment rate and number of unemployed persons prior to the coronavirus (COVID-19) pandemic was 3.5 percent and 5.7 million, respectively, in February 2020). The number of employed persons in The United States increased to 161,262,000 in July of 2023 from 160,994,000 in June of 2023.

United States Non Farm Payrolls
United States Non-Farm Payrolls
  • Private Payrolls Jul: 172K (exp 180K; prev 149K)
  • Change In Manufacturing Payrolls Jul: -2K (exp 5K; prev 7K)
  • Household survey July: +268K vs +273K prior
  • Underemployment Rate U6 July: 6.7% (Prev 6.9%)
  • Birth-death adjustment July: +K vs +26K prior
  • Long-term unemployed June: mil vs (prev 1.1m, 1.2m pre-pandemic)
  • The long-term unemployed decreased to 0.66 percent in June from 0.71 percent in May of 2023.
  • The employment-population ratio June 60.30% vs (prev 60.3%, 61.2% before pandemic)


  • US Average Hourly Earnings (M/M) Jul: 0.4% (exp 0.3%; prev 0.4%)
  • US Average Hourly Earnings (Y/Y) Jul: 4.4% (exp 4.2%; prev 4.4%)
  • Average Weekly Hours All Employees Jul: 34.3K (exp 34.4; prev 34.4)
  • Payrolls benchmark NSA revision for 2022 was in Jan 23
  • Payroll benchmark SA 2022 was in Jan 23

Other Employment Reports for June

  • ADP employment 324K vs 190K expected
  • ISM manufacturing employment 44.4 vs 48.1 prior (lowest since July 2020)
  • ISM services employment 50.7 vs 53.1
  • Philly employment -1.0 vs -0.4 prior
  • Empire employment +4.7 vs -3.6 prior
  • Initial jobless claims survey week 228K vs 240K expected

The market had expected the July report released Friday to show nonfarm payrolls rose 205k new jobs.  July was impacted by higher interest rates and prices started to weigh on the economy. Private payroll company ADP reported that US private sector jobs grew by 324K (consensus 190k).

A severe labor shortage had driven up annual wage increases above 5% every month of this year until the last quarter. By contrast, wage gains averaged 3.2% in the 12 months to February 2020. Wage growth rose last month with, average hourly earnings rose by +0.4% m/m vs +0.3% expected in July from a month earlier. They were up 4.4% from a year earlier.

Employers hired across industries. Companies in certain industries that are vulnerable to interest-rate increases, such as technology and real estate, have announced layoffs. Some firms have implemented hiring freezes.


Labor force participation rate moved up from 62.6% to 62.6% prior; rate for women moved up to highest since pandemic started. Participation is down from 63.4% in February 2020.

United States Labor Force Participation Rate

Market Reaction

  • The S&P 500 futures are up 16 points and are trading 0.3% above fair value.
  • The Nasdaq 100 futures are up 70 points and are trading 0.5% above fair value.
  • The Dow Jones Industrial Average futures are up 68 points and are trading 0.3% above fair value.
  • Yields near the lows of the day right across the curve in response to the data.
  • The 2-yr note yield, at 4.94% just before 8:30 a.m. ET, is down four basis points to 4.85%.
  • The 10-yr note yield, at 4.20% before the data, is down two basis points to 4.17%.

Fed Funds

  • Fed pricing hasn’t changed with 9 bps of additional hiking priced in. The data focus moves to next week’s CPI where the consensus is +3.3% y/y, up from 3.0% but that’s coupled with relatively benign readings on headline and core at +0.2% m/m.

The USD moved lower after the jobs report. US rates moved lower than their pre-release levels. A UBS note circulating (aided by Nick Timiraos) argues that next month’s average hourly earnings number will be low. USD/JPY at the lows of the week and flirting with 142.00.

From UBS last Friday: “Average hourly earnings should get pushed up by a calendar shift, just like in July 2022, and then that undue strength should flip to a softer gain than otherwise next month.”

The report itself being good news for the economy is seen as mixed news for bond and stock markets, a relief however after yesterday’s blowout ADP number with thinking it will question any eventual pivot on rates by the Fed with its monetary policy. The big revisions down question the Fed raising unconditionally, given they are data dependent. The report says still higher for longer with respect to the target range for the fed funds rate, but there is a but.

WSJ Fed Watcher Nick Timiraos on the jobs report:

Where the Jobs Were:

Largest gains (prior month) occurring in:

  • Health care (63K), namely ambulatory health care services (35K) and hospitals (16K);
  • Social assistance (24K);
  • Financial activities (19K), namely real estate and rental and leasing (12K);
  • Wholesale trade (18K). Employment in leisure and hospitality increased by 17K but job gains in the sector have shown little employment change in recent months, following average monthly gains of 67K in Q1. Employment in leisure and hospitality remains below its February 2020 level by 352K.


Household Survey Data  

Both the unemployment rate, at 3.5 percent, and the number of unemployed persons, at 5.8 million,
changed little in July. The unemployment rate has ranged from 3.4 percent to 3.7 percent since March

Among the major worker groups, the unemployment rate for Asians declined to 2.3 percent in July.
The jobless rates for adult men (3.3 percent), adult women (3.1 percent), teenagers (11.3 percent),
Whites (3.1 percent), Blacks (5.8 percent), and Hispanics (4.4 percent) showed little or no change over
the month

Among the unemployed, the number of persons on temporary layoff decreased by 175,000 to 667,000
in July. The number of permanent job losers changed little at 1.4 million.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2
million in July and accounted for 19.9 percent of all unemployed persons.

The labor force participation rate was 62.6 percent for the fifth consecutive month. The employment population ratio, at 60.4 percent, remained little changed in July.

The number of persons employed part time for economic reasons, at 4.0 million, changed little in July.
These individuals, who would have preferred full-time employment, were working part time because
their hours had been reduced or they were unable to find full-time jobs

The number of persons not in the labor force who currently want a job was 5.2 million in July, little
changed from the prior month. These individuals were not counted as unemployed because they were
not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.

Among those not in the labor force who wanted a job, the number of persons marginally attached to
the labor force was essentially unchanged at 1.4 million in July. These individuals wanted and were
available for work and had looked for a job sometime in the prior 12 months but had not looked for
work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the
marginally attached who believed that no jobs were available for them, changed little at 335,000 in July.

Establishment Survey Data

Total nonfarm payroll employment rose by 187,000 in July, less than the average monthly gain of
312,000 over the prior 12 months. In July, job gains occurred in health care, social assistance, financial
activities, and wholesale trade.

Private Jobs

United States Nonfarm Payrolls - Private
  • In July, health care added 63,000 jobs, compared with the average monthly gain of 51,000 in the prior 12 months. Over the month, job growth occurred in ambulatory health care services (+35,000), hospitals (+16,000), and nursing and residential care facilities (+12,000).
  • Social assistance added 24,000 jobs in July, in line with the average monthly gain of 23,000 in the prior 12 months. Individual and family services added 19,000 jobs over the month.
  • Employment in financial activities increased by 19,000 in July. The industry had added an average of 16,000 jobs per month in the second quarter of the year, after employment was essentially flat in the first quarter. Over the month, a job gain in real estate and rental and leasing (+12,000) was partially offset by a loss in commercial banking (-3,000).
  • In July, employment in wholesale trade increased by 18,000, after showing little net change in recent months
  • Employment in the other services industry continued to trend up in July (+20,000), compared with the average monthly gain of 15,000 over the prior 12 months. Employment in personal and laundry services continued to trend up over the month (+11,000). Employment in other services remains below its prepandemic February 2020 level by 53,000, or 0.9 percent.
  • Construction employment continued to trend up in July (+19,000), in line with the average monthly gain of 17,000 in the prior 12 months. Over the month, job growth occurred in residential specialty trade contractors (+13,000) and in nonresidential building construction (+11,000).
  • In July, employment in leisure and hospitality was little changed (+17,000). The industry has shown little employment change in recent months, following average monthly gains of 67,000 in the first quarter of the year. Employment in leisure and hospitality remains below its February 2020 level by 352,000, or 2.1 percent.
  • Employment in professional and business services changed little in July (-8,000). Monthly job growth in the industry had averaged 38,000 in the prior 12 months. Employment in temporary help services continued to trend down over the month (-22,000) and is down by 205,000 since its peak in March 2022.
  • Employment in professional, scientific, and technical services continued to trend up in July (+24,000)
  • Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; retail trade; transportation and warehousing; information; and government.

Government Jobs 

Employment in government increased by 15k in July of 2023, the smallest gain since December, and following a downwardly revised 57k rise in June. Government employment is below its pre-pandemic February 2020 level by 161,000, or 0.7 percent.

United States Government Payrolls

Manufacturing Jobs

US manufacturing payrolls decreased by 2k in July of 2023, following a downwardly revised 6k increase in June, and compared to forecasts of a 5k rise.


In July, average hourly earnings for all employees on private nonfarm payrolls rose by 14 cents, or 0.4
percent, to $33.74. Over the past 12 months, average hourly earnings have increased by 4.4 percent. In
July, average hourly earnings of private-sector production and nonsupervisory employees rose by 13
cents, or 0.5 percent, to $28.96.

 Wages Monthly

United States Average Hourly Earnings MoM

Wages Yearly

United States Average Hourly Earnings YoY

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.3
hours in July. In manufacturing, the average workweek remained unchanged at 40.1 hours, and overtime
was unchanged at 3.0 hours. The average workweek for production and nonsupervisory employees on
private nonfarm payrolls remained at 33.8 hours. (


United States Average Weekly Hours

The change in total nonfarm payroll employment for May was revised down by 25,000, from +306,000
to +281,000, and the change for June was revised down by 24,000, from +209,000 to +185,000. With
these revisions, employment in May and June combined is 49,000 lower than previously reported.
(Monthly revisions result from additional reports received from businesses and government agencies
since the last published estimates and from the recalculation of seasonal factors.)

The Employment Situation for July is scheduled to be released on Friday, September 1, 2023, at 8:30 a.m. (ET).

Source: AFP, Challenger, DOL, TradersCommunity Data, BLS

From The TradersCommunity News Desk