July Jobs Report: Strong Numbers amid Trade Tension

The Department of Labor released the July jobs report on Friday morning. Amid the trade tensions, the July jobs report brought relief. The job numbers were slightly below the expectations. However, the unemployment rate and average MoM (month-over-month) hourly earnings beat the estimates.

What do the July job numbers say?

The results compared to Bloomberg estimates are as follows:

  • The US added 164,000 jobs in July compared to the estimate of 65,000 jobs and the addition of 193,000 jobs in June.
  • The unemployment rate was 3.7% compared to the estimate of 3.6%.
  • In July, the average hourly earnings MoM were 0.3% compared to the estimate of 0.2%
  • The average hourly earnings YoY (year-over-year) were 3.2% compared to the estimate of 3.1%.
  • In July, the labor force participation rate was 63.0% compared to the estimate of 62.9% and 62.9% in June.

Originally, the June payroll numbers showed 224,000 jobs. However, the Department of Labor revised the number to 193,000 jobs.

The July jobs report was also in line with consumers’ sentiments. Last week, a consumer confidence survey showed consumers’ optimism towards the labor market.

Which sectors added jobs?

In July, the hiring looked positive across most of the sectors. The business and professional services sector added the most jobs at 51,000. The health care sector added 35,000 jobs, while transportation and warehousing added 24,000 jobs. The construction sector added 21,000 jobs, while manufacturing added 17,000 jobs.

Other sectors like mining, retail trade, wholesale trade, financial activities, information, leisure and hospitality, and the government didn’t see much change in July. According to Bloomberg, despite healthy figures, the three-month average increase of 140,000 jobs was the slowest in almost two years. The trend showed that job gains are slowing gradually. However, the trend shows that the economy is losing steam. Discussing the July jobs report with Bloomberg Television, Subadra Rajappa, the head of US rates strategy at Société Générale in New York, said, “This is a report that is status quo for the Fed; I think the focus is going to be on all the other events and the rhetoric around tariffs going forward.”

How did the stock market react?

The stock markets fell on Thursday after President Trump tweeted about an additional tariff on China. The new tariff reignited the trade war. The markets also suffered on Wednesday after the Fed cut rates. The Fed didn’t discuss future rate cuts. Overall, the earnings season is in full swing. After the strong jobs report for July, let’s see how the markets have performed on Friday.

The SPDR Dow Jones Industrial Average ETF (DIA) tracks the Dow Industrial Average Index. At 11:04 AM ET, DIA has fallen 1.1%. The Invesco QQQ Trust (QQQ) tracks the NASDAQ Composite Index. QQQ has fallen 1.6%. The SPDR S&P 500 ETF (SPY) tracks the S&P 500 Index. SPY is trading at a loss of 1.2%.

The consumer sector usually benefits from good job numbers. More jobs drive consumer spending. However, the new tariff has taken a toll on the consumer and retail sectors. The Consumer Discretionary Select Sector SPDR ETF tracks the consumer discretionary sector. The EFT has fallen 0.8% on Friday. The SPDR S&P Retail ETF, which tracks the retail sector, has fallen 0.46%.

Other major tech stocks are also trading in the red on Friday. Advanced Micro Devices (AMD), Microsoft (MSFT), Intel (INTC), and Apple (AAPL) have fallen 1.7%, 1.4%, 1.3%, and 2.3%. In contrast, and Micron Technology (MU) has risen 0.62%.

Auto stocks including Tesla (TSLA), Ford (F), and General Motors (GM) have fallen 0.97%, 0.43%, and 0.45%. Ferrari (RACE) released its earnings results on Friday. The stock has fallen 2.2% despite strong results.

Stay tuned to learn about Ferrari’s second-quarter earnings.