Jobs continued to grow at a steady pace in July with the addition of 209,000 to nonfarm payroll employment, a number that equals the index’s average monthly gain over the past 12 months. The unemployment rate was little changed at 6.2 percent in July. Although July hiring slowed after a 298,000 gain in June, the U.S. has generated at least 200,000 jobs in six straight months for the first time since 1997.
Every major sector of the economy added jobs, and hiring was particularly robust in the professional sectors, construction and manufacturing–all sectors that pay above the average national wage. The professional and business services sector added 47,000 jobs in July and has added a total of 648,000 jobs over the past 12 months. Manufacturing added 28,000 jobs in July, averaging 12,000 jobs per month over the past 12 months. Retail trade employment rose by 27,000, and construction added 22,000 in July and 211,000 jobs over the year.
Rise in Unemployment Rate a Good Sign?
Unemployment grew to 6.2 percent in July, and despite common belief that higher unemployment means more people are out of work, the increase may actually be a positive sign. In a growing economy, a higher unemployment rate can indicate people are more encouraged about finding a job, leading them to join or rejoin the labor market to begin their search.
In fact, this is what happened in July. The labor force grew by 329,000 to 156 million this past month. The number of people categorized as officially unemployed rose by 197,000, with most of that gain due to individuals entering for the first time or rejoining the labor market. Furthermore, only 50 percent of the nation’s 9.67 million unemployed reflect job loss; the rest are those who have started looking for work.
Middle Wage Jobs on the Rise
An encouraging trend arising from the strengthening economy is a boost in middle class employment–those jobs that pay about $770 a week, such as manufacturing, sales, transportation and construction. This employment category has expanded since 2013, with growth in midwage jobs accelerating to an average of 1.5 percent in 2014, up from 1 percent for the two prior years, according to Moody’s Analytics.
The rise in middle class hiring also bumps up wage growth. For example, Capital Economics reports the 1.3 million private sector jobs created this year pay better at an average of $867 per week vs. $843 per week, which is the average amount earned by the nation’s existing 117 million private sector workers. Perhaps most optimistic is the 35 percent of Americans who say now is a good time to find a quality job, a number that is up from as low as eight percent in 2011 according to a recent Gallup Poll.
Gross Domestic Product Shows Signs of Improvement
Gross domestic product (GDP) is the most comprehensive gauge of the economy, and a majority of GDP is created through consumer spending. On July 30 the Bureau of Economic Analysis released its advance estimate of real gross domestic product for the second quarter of 2014, which showed U.S. output increasing at an annual rate of 4 percent. In the first quarter, real GDP decreased 2.1 percent.
GDP numbers appear to support business, consumer and labor market indicators over the past several months, which show the U.S. economy is steadily improving. The increase in real GDP is largely attributed to growing personal consumption expenditure, private inventory investment, exports, nonresidential fixed investment, state and local government spending and residential fixed investment.
Employee and Consumer Confidence Soar
On the heels of June reports showing Randstad’s U.S. Employee Confidence Index at its highest level since 2007, the index rose in July another 1.0 point to 59.1, while the macroeconomic confidence index rose to 49.2, reaching its highest level since Randstad began tracking the index in August 2004.
In addition to improving economic conditions, workers feel more confident about the availability of jobs, with roughly three in ten (29 percent) believing more jobs are available today, compared to 26 percent last month. Meanwhile, 61 percent of employees feel confident in the future of their current employer, the same number as in June.
Also surging to its highest level in almost seven years, the Conference Board’s consumer confidence index reached 90.9 in July, up from 86.4 in June. This is the third consecutive monthly increase and the best reading since October 2007. The survey shows many consumers see the labor market continuing to improve. Those expecting more jobs in the months ahead increased to 19.1 percent from 16.3 percent in June, while those projecting fewer jobs fell to 16.4 percent from 18.4 percent.