Job growth slowed in July after a red-hot labor market in the first half of the year

• The summer jobs market so far is cooling.
• The US unemployment rate ticked down to 3.5% in July.

While the US experienced a July with record-high temperatures, the labor market meanwhile wasn't so hot.

According to Bureau of Labor Statistics' data on nonfarm payrolls released on Friday, the US added 187,000 jobs over the month in July, under the job growth forecast of 200,000. July's growth was slightly higher than the monthly growth in June, which was revised from a gain of 209,000 to a gain of 185,000.

May's job growth was also revised to the BLS' final estimate of 281,000, down from the previously revised gain of 306,000 in the previous employment report, which was a smaller gain than the preliminary estimate of 339,000.

Private education and health services saw a one-month job gain of 100,000, with healthcare and social assistance seeing a gain of 87,100. Leisure and hospitality, construction, and financial activities are some of the other industries that saw job growth. Transportation and warehousing is one industry that did not, with a loss of 8,400.

The unemployment rate didn't see that much of a change, which was expected. The unemployment rate changed from 3.6% in June to 3.5% in July. The rate was expected to still be 3.6%.

Average hourly earnings was up 4.4% year over year in July. This percent change was also 4.4% in January, April, and June this year. Looking just at the change over the month, hourly earnings increased by 0.4%, which again was the case in April and June.

"Today's report shows that the job market is on a slow but steady path towards the soft landing," Daniel Zhao, lead economist at Glassdoor, told Insider.

Julia Pollak, chief economist at ZipRecruiter, told Insider Friday's report from BLS showed a slowing labor market but one that's "still very solid."

And with a slight drop in the workweek "amid strong GDP growth numbers," Pollak said "that worker productivity is rising, and that productivity increase will allow real wage growth without causing inflation."

"And so yes, while the wage growth number came in hot, it isn't necessarily unsustainable given recent productivity data," Pollak added.

The overall labor force participation rate was 62.6%. That marks July the fifth straight month of this rate, as pointed out in Friday's news release from BLS. The prime-age labor force participation rate ticked down slightly from 83.5% in June to 83.4% in July.

The employment-population ratio was yet another data point that was little changed in July. That ratio was 60.4% in July, up from 60.3% in June. Both the "number of persons employed part time for economic reasons" and "the number of persons not in the labor force who currently want a job" were noted in Friday's BLS report as little changed too.

Different data points before Friday's jobs report suggest that the labor market is still a strong jobs market for workers and job seekers.

"The US labor market has come off the boil, but it's still simmering," Nick Bunker, economic research director for North America at the Indeed Hiring Lab, said in his commentary after Tuesday's JOLTS report from the Bureau of Labor Statistics. "Demand for workers – whether new ones or existing ones – remains high, and job seekers are still in the driver's seat."

Job openings remained just under 10 million in June, with roughly 9.6 million openings in June. That was similar to the estimate for May. There were 10.3 million openings back in April. The number of monthly hires was just under 6 million in June, with 5.9 million hires. Before that, there have been at least 6 million hires each month since early 2021.

"Job openings still outnumber unemployed workers by a ratio of 1.6 to 1," Bunker said in his commentary. "The quits rate, a key signal of job seeker confidence, remains above its pre-pandemic average."

That's all good news when it comes to dodging a potential downturn.

"These numbers are inconsistent with recession. That has been true pretty much since the president came into office," Acting Secretary of Labor Julie Su told Insider. "He predicted a little over a year ago that with the right policies, we would transition from high, fast recovery to stable and steady growth, all while bringing down inflation. And that is what we are seeing."

The Fed raised interest rates in July by 25 basis points, after a pause in June, as it still fights inflation, even if inflation has been slowing. With some cooling in the labor market, Bunker told Insider after the release of the jobs report on Friday that he believes the Fed will "be encouraged by the payroll numbers, but not too pleased with the wage numbers" as wage growth is "not really slowing down" or "approaching levels they would like to see."

"I think that they sort of be more encouraged by the fact that demand seems to be slowing down and maybe wage growth will follow," Bunker added. "But overall, I think this is probably a mixed report for the Fed."

Pollak described the labor market as sustainable, and Bunker described it as robust.

"Demand is strong but fading," Bunker said. "Hiring is fading but strong. But, we're still seeing very low levels of joblessness, low levels of people losing their jobs. So this is still a strong, resilient, robust labor market."