July Jobs Report: Hiring Continues to Cool as Unemployment Spikes

The Bureau of Labor Statistics reported Friday the U.S. economy added 114,000 jobs in July. It’s a significant cooldown from the first six months of the year, when the economy averaged adding 217,000 jobs per month.

The unemployment rate rose to 4.3%, the highest it’s been since October 2021.

“We have a lot of people looking for jobs, and there just aren’t as many jobs out there to support that,” Will Pullin, a Managing Director of Recruiting and Insight Global, said. “It’s better in some pockets of the United States and with certain skill sets, but the consensus is it’s not consistent.”

• Most of the job gains occurred in the healthcare (+55,000), construction (+25,000), and transportation (+14,000) industries.
• Wages increased just 0.2% month-over-month and 3.6% year-over-year, the lowest rate since the middle of 2021.
• New jobless claims reached a one-year high at 249,000 in a week, though economists say this remains a “healthy” average for the economy. The total number of week-over-week jobless claims reached 1.88 million. This corresponds with the unemployment rate increasing/staying above 4%.
• Private employment increased by just 122,000, according to private payroll company ADP. “The labor market is playing along with the Federal Reserve’s effort to slow inflation,” their chief economist said.
• Inflation continued to cool in June. The month-over-month Consumer Price Index (CPI) dropped from 3.3% to 3%, and the Personal Consumption Expenditures (PCE) index dropped from 2.6% to 2.5%.

Despite inflation continuing to cool, the Federal Reserve chose to maintain interest rates at their current level during their July meeting.

Chairman Jerome Powell said interest rate cuts at their next meeting are “on the table.” He also said the cooling that’s happened in the labor market has been enough.

“I don’t think of the labor market in its current state as a likely source of significant inflationary pressures. So, I would not like to see material further cooling in the labor market,” Powell said.

Part of the reason the Fed raised interest rates was to slow down hiring. The balance is raising them long enough to help cool inflation but not long enough to spin unemployment out of control.

Through the economic conditions over the last couple of years, the hiring market has shifted from favoring job seekers to favoring employers. Wage growth has stabilized, hybrid schedules dominate the work landscape, and employers are setting higher expectations for their candidates.

Nevertheless, as a staffing company, we see the struggles on both sides, so, with some help from Pullin, let’s discuss a couple of ways job seekers and hiring managers can navigate this job market.

Treat Finding a Job Like a Job

The number of job openings per job seeker continues to decline, though there are still more job openings than there are job seekers. But it’s tough in the job market for job seekers, as more people are applying for fewer jobs than there were in more robust markets in 2021 and 2022.

Pullin, who’s recruited in the past during these types of job search environments, says job seekers are trying to do two things now: stand out to get an interview, then execute that interview.

Here are a couple of ways Pullin says job seekers can accomplish that:

• Listen to the market: “The environment has changed,” Pullin said. Not just the economy, but the tech people use has changed, where we work has changed, and how much companies are paying for certain roles has changed. Flexibility is key for job seekers. “If you have a really great opportunity and it’s more of a lateral movement, you might need to think that opportunity through more than you would have two or three years ago.”
• More conciseness and directness: Pullin said hiring managers primarily value two things out of resumes and interviews: clearness about what the candidate has done in the past, and how that applies to the role they’re applying to. Less explanation is often more.
• Treat finding a job like a job: “You’ve got to be flexible, and you have to show the employer that you’re ready and want that specific job,” he says. It’s totally reasonable to get burned out during a long job search, but when you get an opportunity in front of a hiring manager, be optimistic, Pullin advises. Be proud of what you’ve done and how it can apply to this role. Know more than you should know about the role and company.

Don’t Wait For Your Unicorn

On the flip side, employers are seeing more job seekers apply to roles than they have in the last couple of years. Pullin said in a hiring market that’s more advantageous for employers, a lot will sit and wait for the perfect candidate. Or, they’ll hire someone extremely overqualified because they need a job.

But hiring managers should try to find a nice blend of hiring someone who has the skills but also really wants the specific job, he said.

“The right person for the job is more complex than simply pairing up past experiences perfectly. Bet on potential. Bet on the person who aligns with your core values and is passionate about being coachable and looks for feedback. Take the ambitious person who has a proven track record of displaying an incredible work ethic, is motivated, and will grow with the position. That’s the person who is going to join your organization and make a lasting, positive impact.”

“If you have someone who can do the job and wants to be there, pull the trigger. Don’t wait for your unicorn.”