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Total nonfarm payroll employment rose by 187,000 in July, in line with the revised figure of 185,000 jobs added in June, according to the latest jobs report from the Bureau of Labor Statistics (BLS).

While cooling employment growth is a positive sign for the Federal Reserve in its efforts to cool the economy, Zonda chief economist Ali Wolf says the July report provided “mixed” results for next steps in the economy.

“The slowing of the rate of job growth was good, as Americans can still find jobs, but demand for employees feels less insatiable,” says Wolf. “The persistently high levels of wage growth, however, will be less welcome news for policymakers; high wage growth is one of the contributors to wider inflation in the economy.”

According to the BLS, over the past 12 months, hourly earnings have increased by 4.4%, a level similar to wage growth in recent months. Fannie Mae deputy chief economist Mark Palim says “such strong wage growth” remains above a level that would correspond to the Federal Reserve’s 2% inflation target.

In July, both the unemployment rate, at 3.5%, and the number of unemployed persons, at 5.8 million, were little changed. The unemployment rate has ranged between 3.4% and 3.7% since March 2022. Job gains were most widespread in the health care, social assistance, financial activities, and wholesale trade sectors. Residential construction employment increased by 7,800 in July, a trend that should help builders alleviate supply constraints, according to Palim.

“Job growth over the prior two months was revised downward by a combined 49,000, another sign of gradual slowing,” says Palim. “The biggest gains were seen in the private education and health services (+100,000 jobs) sector, while the temporary help services sector (-22,100 jobs) saw the biggest decline.”

The number of long-term unemployed—those jobless for 27 weeks or more—was little changed at 1.2 million in July and accounted for 19.9% of all unemployed persons. The number of persons on temporary layoff decreased by 175,000 to 667,000 in July, while the number of permanent job losers was little changed at 1.4 million.

The labor force participation rate was 62.6% for the fifth consecutive month, while the employment-population ratio was little changed in July at 60.4%.

“The number of workers who hold a part-time job but would prefer full-time employment fell by nearly 200,000 in July, a positive sign for labor demand,” Palim says.