If there’s one thing an economy’s supposed to do, it’s add jobs. At least enough to absorb folks joining and re-joining the workforce — from school, raising kids, and (at least in former times) immigration.
So a -23,000 month, like the U.S. economy had in July, is definitely going in the wrong direction. In fact, over the past three months, with those big downward revisions, job creation has averaged just 20,000 a month, which is pretty anemic.
Diving deeper into these signs of mediocrity, July saw job losses in several sectors: local government down 57,000, leisure and hospitality down 40,000, finance down 14,000, retail down more than 19,000.
The sector that lost the most jobs in July was local government education. That category is mostly K-12 public school roles, which were down almost 50,000.
Such a sharp drop could be a flaw in “seasonal adjustment,” said Elise Gould, senior economist at the Economic Policy Institute. She said many teachers are laid off in the summer.
“At the same time, local education employment has fallen every month since March,” Gould said — as in, when school is still in session. “We know that there have been funding cuts at the Department of Education. Worse budget cuts may be coming, and that could cause even more uncertainty about hiring or keeping teachers on staff.”
Financial services, another job-loser, is down 114,000 in the last year. This is partly about the weak housing market and high mortgage rates, said Brian Bethune, a financial economist at Boston College.
“Mortgage activity has slowed to a standstill,” he said.
Also at risk are back-office jobs in areas like compliance and fraud prevention, said Nationwide Chief Economist Kathy Bostjancic.
“We do see AI having some impact, if they’re doing a job that can be automated,” she said.
Bostjancic pointed to another sector that lost jobs in both June and July: leisure and hospitality.
“The surprising part there is that it happened during the World Cup, right? Ticket sales were strong, attendance, tourism,” she said.
Andrew Flowers at recruitment technology firm Appcast said he sees one reason that both leisure and hospitality, and retail shed jobs in July: “Those are very consumer-facing industries. Inflation is now outpacing wage gains, so households are starting to pull back on spending.”
Companies are ready to let their headcounts shrink, in case consumers keep getting more frugal into the fall.
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