4 ETFs In Focus Post July Jobs Data

Hiring in America cooled down in July but remained in an expansionary mode. The economy added 157,000 jobs, falling short of analysts’ expectation of 195,000 as surveyed by MarketWatch. This marks the lowest reading since March. However, the shortfall is well accompanied by upward revisions to May and June numbers from 244,000 to 268,000 and from 213,000 to 248,000, respectively.

Most of the job gains came from solid hiring in professional and business services, which added 51,000 workers. This was followed by increases of 40,000 in leisure and hospitality, 37,000 in manufacturing, 34,000 in health care and social assistance, 19,000 in construction, and 7,000 in retail. Notably, job gains for the manufacturing sector have been the highest since April 1995 when considered in a 12-month period, reflecting an increase of 327,000.

Additionally, the unemployment rate dropped to nearly a two-decade low at 3.9% from 4%, and average hourly earnings rose seven cents to $27.07, keeping year-over-year wage growth unchanged at 2.7%. Another broad measure of labor-market health — the employment-population ratio — rose from 60.4% to 60.5%, the highest since early 2009.

The moderation in employment gains and steady wage growth will likely ease concerns over the economy’s overheating and keeps the Fed on a gradual path of monetary policy tightening. The massive $1.5 trillion fiscal stimulus plan and tax overhaul has been acting as a major catalyst. U.S. GDP growth expanded 4.1% year over year in the second quarter, representing the fastest pace of growth in nearly four years.

Any Risk

Investors should note that the tit-for-tat exchange of tariffs could create trouble for the economy and the jobs market as trade disputes could trigger a global slowdown. The latest development in this worrying situation is China’s threat to put import tariffs on $60 billion worth of American goods and a warning that it has reserved the right of further countermeasures.