Solid Jobs Growth in July

The job market continues to be a pillar of strength for the U.S. economy.

Nonfarm payrolls rose 164,000 in July, in line with consensus estimates for a 165,000 gain, according to the jobs report released August 2. As shown in the LPL Chart of the Day, Solid Jobs Growth in July, job creation has slowed slightly this year amid the aging economic expansion, but not to levels that concern us. The 12-month average payrolls gain through July was 187,000, still an above-average pace for the expansion.

 

Strength in the job market is especially important these days as U.S. consumers increasingly bear the weight of economic growth. Consumer activity added 2.9 percentage points to second quarter gross domestic product (GDP), carrying GDP growth to 2.1%.

Initial jobless claims, a leading economic indicator, have also pointed to firm labor-market conditions. The four-week average for unemployment claims fell to the fifth-lowest level of the expansion through July 26.

“We’ve been encouraged by the labor market’s resiliency amid recent global uncertainty,” said LPL Research Chief Investment Strategist John Lynch. “A solid labor market should continue to bolster consumer confidence and buoy economic activity.”

Average hourly earnings grew 3.2% year over year in July, a faster pace than June’s growth and at a healthy clip for the U.S. consumer. Wages constitute about 70% of business costs, so we’re hoping meaningful pay increases will eventually help lift consumer inflation, countering weakness in global demand. The unemployment rate climbed to 3.7%, still near a cycle low.

IMPORTANT DISCLOSURES

Please see the Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets for additional description and disclosure.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (Member FINRA/SIPC).  Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.

If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:

Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank/Credit Union Deposit

Member FINRA /SIPC

For Public Use | Tracking # 1-878972