Fed likely to keep rates low on job data
Print Edition
US job growth slowed more than expected in July and an unexpected rise in the unemployment rate pointed to some slack in the labor market that could give the Federal Reserve room to keep interest rates low.
Nonfarm payrolls increased 209,000 last month after surging by 298,000 in June, the Labor Department said yesterday. Data for May and June were revised to show a total of 15,000 more jobs created than previously reported.
July marked the sixth straight month that employment has expanded by more than 200,000 jobs, a stretch last seen in 1997. The one tenth of a percentage point increase in the unemployment rate to 6.2 percent came as more people entered the labor market, a sign of confidence in the job market.
Average hourly earnings, which are being closely monitored as a potential signal of reduced slack that could prompt the Fed to raise rates, rose only 1 cent. That left the annual rate of increase at 2 percent, still well below the levels that would make Fed officials nervous.
Fed officials on Wednesday cautioned that “significant” slack remained, signaling patience on the rate front.
Economists had expected payrolls to increase 233,000 last month and the unemployment rate to hold steady at 6.1 percent. The cooling in hiring is unlikely to change perceptions about economic growth in the third quarter.
The economy grew at a 4 percent annual pace in the second quarter after shrinking at a 2.1 percent rate in the first three months of this year. While restocking by businesses lifted the figure, growth is seen remaining sturdy for the rest of 2014.
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