US economy added just 187,000 jobs in July as hiring comes in lower than expected as labor market loses momentum

U.S. employers added 187,000 jobs last month, less than expected as the labor market slowed on higher interest rates.

Still, the unemployment rate fell slightly to 3.5 percent, remaining near its six-decade low, a sign that the labor market remains resilient and raises hopes that the US can avoid a long-awaited recession.

Major U.S. stock indices opened higher following the Labor Department’s employment report on Friday, with the Dow Jones Industrial Average rising 152 points, or 0.43 percent, in early trading.

The number of jobs created last month rose from 185,000 in June, a figure the Labor Department revised down from the 209,000 originally reported. Economists had expected 200,000 new jobs in July.

Still, last month’s hirings remained solid given that the Federal Reserve has raised its benchmark rate 11 times since March 2022. In 2019, a pre-pandemic year of economic growth, an average of 163,000 jobs were created per month.

The employment rate remained unchanged for a fifth consecutive month at 62.6 percent, matching the pre-pandemic low last seen in August 2018.

The US economy and labor market have repeatedly defied predictions of an approaching recession.

More and more economists are expressing confidence that inflation fighters at the Federal Reserve can deliver a difficult “soft landing” – raising interest rates just enough to contain inflation without sending the world’s largest economy into recession.

Consumers are also feeling brighter: The Conference Board, an industry research group, said its consumer confidence index hit its highest level in two years last month.

There are other indications that the labor market, while still robust, is losing momentum.

The Labor Department reported on Tuesday that the number of job openings fell below 9.6 million in June, the lowest in more than two years.

Still, compared to pre-pandemic standards, the numbers remain extremely robust: monthly job openings never exceeded 8 million before 2021.

A “hiring now” sign was seen on the window of a Ross clothing store in Rockville, Maryland, last month.

The number of people quitting their jobs – a sign of confidence that they can find something better elsewhere – also fell in June, but remains above pre-pandemic levels.

The Fed wants hiring to cool down. Strong demand for workers drives up wages and can force companies to raise prices to compensate for higher costs.

Developing story, more to come.