Home Ideas Human Resources & Management U.S. economy added 255,000 jobs in July

U.S. economy added 255,000 jobs in July

Unemployment rate holds steady at 4.9 percent

WASHINGTON (Reuters) – U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth and raising the probability of a Federal Reserve interest rate increase this year.

Nonfarm payrolls rose by 255,000 jobs after an upwardly revised 292,000 surge in June, with hiring broadly based across the sectors of the economy, the Labor Department said on Friday.

BizTracker-Job-candidates-shutterstock_171112193

The unemployment rate was unchanged at 4.9 percent as more people entered the labor market. Highlighting job market strength, average hourly earnings increased a healthy eight cents and workers put in more hours. In addition, 18,000 more jobs were created in May and June than previously reported.

“The July jobs report was everything you could have asked for and more. Provided the strength in jobs is confirmed with other economic data, the Fed will have sufficient reason to hike (rates) this year,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York.

The dollar rallied against a basket of currencies after the data, while prices for U.S. government debt fell as traders ramped up bets for an eventual rate hike. U.S. stocks rose, with the S&P 500 index hitting a record intraday high.

The signs of labor market strength, particularly the pickup in wage growth, could ease voter frustrations with an economic expansion that has left many Americans behind. That discontent has helped fuel support for Republican presidential nominee Donald Trump, who plans to lay out his economic vision in a speech on Monday.

Economists polled by Reuters had forecast payrolls increasing 180,000 in July and the unemployment rate dipping one-tenth of a percentage point to 4.8 percent.

Last month’s strong jobs growth should reinforce the Fed’s confidence in a labor market that officials view as at or near full employment. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.

The U.S. central bank raised interest rates at the end of last year, its first hike in nearly a decade, but since then has held them steady amid concerns over persistently low U.S. inflation and a global growth slowdown.

Given lingering global uncertainties and the upcoming U.S. presidential election, most economists expect another rate increase only in December, but financial markets are less sure. After Friday’s data, futures contracts were pricing in about a 46 percent chance of a rate hike by the end of this year, up from about 34 percent.

RISING WAGES

Last month’s 0.3 percent increase in average hourly earnings left the year-on-year gain at 2.6 percent. The average workweek increased by 0.1 hour to 34.5 hours in July, the most since January. With both hours and hourly earnings rising, workers’ take-home pay shot up 0.6 percent.

“Businesses are still willing to invest in labor and pay higher wages to retain employees. The combination of strong employment and firming wage growth should remain supportive of income and consumer spending,” said Greg Daco, head of U.S. macroeconomics at Oxford Economics in New York.

The payrolls data added to July auto sales in underscoring the economy’s sound fundamentals. The Atlanta Fed is currently forecasting GDP growth accelerating at a 3.8 percent annualized rate in the third quarter, after averaging a tepid 1.0 percent in the last three quarters.

But with the bulk of labor market slack largely absorbed and the economy’s recovery from the 2007-09 recession showing signs of aging, payroll gains will probably drift lower over the next 12 months, economists say.

“While a maturing labor market will translate into lower job creation over the next twelve months, reduced labor market slack should provide an offset through stronger wage growth,” Daco said.

Manufacturing sector employment increased by 9,000 jobs in July after adding 15,000 positions in June. Construction payrolls rose 14,000 following three consecutive months of declines. Mining shed 7,000 jobs in July.

Professional and business services, a high wage sector, added a strong 70,000 jobs last month, the most since last October. Retail sector employment increased by 14,700 jobs and payrolls in the leisure and hospitality sector rose by 45,000.

Temporary-help jobs, a harbinger of future hiring, increased 17,000. Health care and social assistance payrolls rose by 48,800 jobs, extending the prior month’s hefty gains. Government employment increased by 38,000 jobs as state and local authorities stepped up hiring of teachers.

Other details showed a rise in the labor force, which lifted the participation rate, or the share of working-age Americans who are employed or at least looking for a job, by one-tenth of a percentage point to 62.8 percent.

The employment-to-population ratio increased to 59.7 percent from 59.6 percent in June.

But a broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment rose one-tenth of a percentage point to 9.7 percent last month.

Read more economic data reports at the BizTracker page.

WASHINGTON (Reuters) - U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth and raising the probability of a Federal Reserve interest rate increase this year. Nonfarm payrolls rose by 255,000 jobs after an upwardly revised 292,000 surge in June, with hiring broadly based across the sectors of the economy, the Labor Department said on Friday. The unemployment rate was unchanged at 4.9 percent as more people entered the labor market. Highlighting job market strength, average hourly earnings increased a healthy eight cents and workers put in more hours. In addition, 18,000 more jobs were created in May and June than previously reported. "The July jobs report was everything you could have asked for and more. Provided the strength in jobs is confirmed with other economic data, the Fed will have sufficient reason to hike (rates) this year," said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York. The dollar rallied against a basket of currencies after the data, while prices for U.S. government debt fell as traders ramped up bets for an eventual rate hike. U.S. stocks rose, with the S&P 500 index hitting a record intraday high. The signs of labor market strength, particularly the pickup in wage growth, could ease voter frustrations with an economic expansion that has left many Americans behind. That discontent has helped fuel support for Republican presidential nominee Donald Trump, who plans to lay out his economic vision in a speech on Monday. Economists polled by Reuters had forecast payrolls increasing 180,000 in July and the unemployment rate dipping one-tenth of a percentage point to 4.8 percent. Last month's strong jobs growth should reinforce the Fed's confidence in a labor market that officials view as at or near full employment. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth. The U.S. central bank raised interest rates at the end of last year, its first hike in nearly a decade, but since then has held them steady amid concerns over persistently low U.S. inflation and a global growth slowdown. Given lingering global uncertainties and the upcoming U.S. presidential election, most economists expect another rate increase only in December, but financial markets are less sure. After Friday's data, futures contracts were pricing in about a 46 percent chance of a rate hike by the end of this year, up from about 34 percent. RISING WAGES Last month's 0.3 percent increase in average hourly earnings left the year-on-year gain at 2.6 percent. The average workweek increased by 0.1 hour to 34.5 hours in July, the most since January. With both hours and hourly earnings rising, workers' take-home pay shot up 0.6 percent. "Businesses are still willing to invest in labor and pay higher wages to retain employees. The combination of strong employment and firming wage growth should remain supportive of income and consumer spending," said Greg Daco, head of U.S. macroeconomics at Oxford Economics in New York. The payrolls data added to July auto sales in underscoring the economy's sound fundamentals. The Atlanta Fed is currently forecasting GDP growth accelerating at a 3.8 percent annualized rate in the third quarter, after averaging a tepid 1.0 percent in the last three quarters. But with the bulk of labor market slack largely absorbed and the economy's recovery from the 2007-09 recession showing signs of aging, payroll gains will probably drift lower over the next 12 months, economists say. "While a maturing labor market will translate into lower job creation over the next twelve months, reduced labor market slack should provide an offset through stronger wage growth," Daco said. Manufacturing sector employment increased by 9,000 jobs in July after adding 15,000 positions in June. Construction payrolls rose 14,000 following three consecutive months of declines. Mining shed 7,000 jobs in July. Professional and business services, a high wage sector, added a strong 70,000 jobs last month, the most since last October. Retail sector employment increased by 14,700 jobs and payrolls in the leisure and hospitality sector rose by 45,000. Temporary-help jobs, a harbinger of future hiring, increased 17,000. Health care and social assistance payrolls rose by 48,800 jobs, extending the prior month's hefty gains. Government employment increased by 38,000 jobs as state and local authorities stepped up hiring of teachers. Other details showed a rise in the labor force, which lifted the participation rate, or the share of working-age Americans who are employed or at least looking for a job, by one-tenth of a percentage point to 62.8 percent. The employment-to-population ratio increased to 59.7 percent from 59.6 percent in June. But a broad measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment rose one-tenth of a percentage point to 9.7 percent last month. Read more economic data reports at the BizTracker page.

Stay up-to-date with our free email newsletter

Keep up with the issues, companies and people that matter most to business in the Milwaukee metro area.

By subscribing you agree to our privacy policy.

No, thank you.
Exit mobile version