According to David deGaris, Senior Economist at NAB, “The details continue to hint at the labor market softening at the edges, at an incremental pace.” Employment growth has slowed measurably over the past year from a 1.7% annual rate last July to a more pedestrian 0.6% rate by this July. “Ordinarily this would not be sufficient growth in employment to arrest a rise in the unemployment rate with the civilian population growing at an annual 1.25% pace. The savior – in terms of holding the unemployment rate steady – has been the incremental decline in the participation rate that’s pulled back from 65.6% a year ago to 65.2% this July.” he adds.
So there are hints that a steady unemployment rate belies some modest rise in the economy’s available labor supply, keeping the door ajar to the possibility of further monetary stimulus as wage pressure fears recede. “Today’s report argues for a continuation of the current growth supportive stance of monetary policy given the international risks and tightening domestic fiscal policy.” deGaris notes.