There was a lot of important information on the U.S. economy released this week but the biggest data point is without a doubt the latest monthly job report from the Bureau of Labor Statistics (BLS) out this morning. Indeed, total nonfarm employment in America rose by 209K payrolls in July, the 82nd monthly gain in a row and much better than the 178K increase economists had expected. There were also mixed revisions to the May and June figures, which altogether resulted in an average rate of payrolls growth of 195K during the past three months. That is the best reading since February and well above many Federal Reserve (Fed) officials’ estimates for what is needed to keep up with U.S. population growth.
Last month’s strong payrolls number was driven by hiring in the hospitality sector, particularly restaurants, as well as solid gains in the manufacturing and health services arenas. As for joblessness in America, the official unemployment rate (U-3) slid to 4.3 percent in July, matching a 16-year low, and the underemployment rate (U-6) held steady at 8.6 percent. At the same time, the labor force participation rate lifted to 62.9 percent last month, the highest reading since April. Also improving in July was wage growth, as average hourly earnings grew by 0.3 percent. That is up from 0.2 percent in June but on a year-over-year basis wages continue to expand at just 2.5 percent. That remains nowhere near fast enough to meaningfully threaten the Fed’s inflation target. Altogether, this was another solid job report but the combination of elevated payrolls growth and only moderate pressure on wages should keep the uncertainty surrounding the next Federal Open Market Committee (FOMC) meeting elevated.
Sources: Econoday, Bloomberg, Twitter, U.S. DoL, FRBSLPost author: Charles Couch