U.S. employers slowed their hiring in July, adding a still-healthy 164,000 jobs to an economy that appears poised to extend its decade-plus expansion.
The unemployment rate remained at 3.7% for a second straight month, the Labor Department reported Friday. Average hourly earnings increased 3.2% from a year ago, up from annual gains of 3% in June.
The pace of hiring has slowed this year as a growing share of Americans already have jobs. The three-month average for job gains was 140,000, down from 237,000 a year ago.
The U.S. economy has faced some tumult as President Trump has escalated his trade conflict with China, yet the Federal Reserve voted Wednesday to cut a short-term interest rate to sustain the longest period of growth in U.S. history.
The economy’s overall growth, along with consumer spending, has been solid. But business investment has been declining, home sales have weakened and manufacturers have shown signs of struggling.
Despite the economy’s resilience, the Federal Reserve on Wednesday cut its benchmark interest rate for the first time in a decade to try to counter the impact of Trump’s trade wars, stubbornly low inflation and global weakness. On Thursday, the president announced plans to tax an additional $300 billion of Chinese imports beginning in September.
Though it is growing consistently, the economy appears to be sliding into a slower phase. The gross domestic product — the total output of goods and services produced in the United States — grew at a decent if unspectacular 2.1% annual rate in the April-June quarter, down from a 3.1% pace in the January-March period.
Consumer spending increased at a 4.3% annual rate and helped propel much of the growth. But business capital investment declined for the first time in three years, a likely sign that Trump’s aggressive use of tariffs against China and other countries has slowed corporations’ expansion plans.
Pay gains also appear to have stalled, even though lower unemployment has historically boosted worker pay. Wages and benefits have risen 2.7% over the past 12 months, down slightly from the 2.9% gain for last year, the Labor Department said.
Home sales have fallen as high prices have kept many people out despite the benefits of low mortgage rates and job gains. Sales of existing homes have tumbled 2.2% over the past 12 months, according to the National Assn. of Realtors.
Factories have also been coping with a slowdown. In part, that’s because the global economy has weakened and the president’s tariffs on hundreds of billions of dollars’ worth of goods — and threats to add more — have disrupted supply chains. The Fed said this month that manufacturing output has improved just 0.4% from a year ago after having declined over the past six months.
There are signs, though, that consumers are optimistic. The Conference Board’s index of consumer confidence last month reached its best reading since November. A higher percentage of Americans anticipate pay raises in the next six months.
Indeed, spending at restaurants and bars has increased 4.2% year-to-date, according to government reports. And while traditional store retailers have faced hardships, online stores have prospered: Non-store retailers have enjoyed a 10.6% jump in sales.