Unemployment Rate for Workers Without High School Degrees Hits Record Low

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The unemployment rate in the United States dropped to 3.9% in July from 4% in June. US establishments added a net new 157,000 jobs, following the upwardly revised average gains in May and June of an outsized 258,000.

Job gains were seen in the durable goods manufacturing and health care sectors as well as in restaurants and bars.

Workers with only a high school degree also seem to be doing relatively better, with a 4.0 percent unemployment rate matching the prerecession low (it had been 3.9 percent in May), although still above the 3.2 percent low hit in 1999.

The decline in the jobless rate reflected a 284,000 decline in the number of unemployed people in the workforce, while the number of employed increased by 389,000. Mortgage rates have also increased in the past year, lifting monthly payments and making many homes even less affordable.

A quirk in the calendar may explain why average hourly wages inched up only 7 cents from June to July, explained Josh Wright, chief economist at software firm iCIMS: The Labor Department surveys employers at a different time than when companies pay their workers.

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One signal that July was a strong month can be found in the low number of people filing for unemployment benefits for the first time.

A collective upward revision of 59,000 for May and June brought the three-month average for job creation to 224,000, faster than the growth pace seen past year.

Although the overall gain for July came in slightly below expectations, figures for payroll increases in May and June were revised substantially higher. (With revisions, it was 224,000, compared with 184,000 in the same period last year and 181,000 in 2016.) "It is wonderful that at this point in a recovery you are seeing growth that is on average faster than the previous two years", she said.

Wages remain the only red flag in the US labor market. Politically sensitive trade gaps with China, Mexico and Canada all increased, potentially setting the stage for even more sabre-rattling tweets from President Trump.

Economists had forecast that the number of jobs created would be nearly 190,000 for the month. With revisions, job gains have averaged 224,000 a month over the past three months. Wage growth has been stuck around that level for two years. Retail payrolls rebounded by 7,100 jobs last month after losing 20,200 in June. Employment rose in transportation equipment (+13,000), machinery (+6,000), and electronic instruments (+2,000).

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