US jobs data hint at rosier outlook
Print Edition
EMPLOYMENT in the United States rose at a solid clip last month and wages rebounded after a surprise stall in June, signs of an improving economy that could open the door wider to a Federal Reserve interest rate hike in September.
Nonfarm payrolls increased 215,000 in July as a pickup in construction and manufacturing employment offset further declines in the mining sector, the Labor Department said yesterday. The unemployment rate held at a seven-year low of 5.3 percent.
Payroll data for May and June were revised to show 14,000 more jobs created than previously reported. Also, the average workweek increased to 34.6 hours, the highest since February, from 34.5 hours in June.
Though hiring has slowed from last year’s robust pace, it remains at double the rate needed to keep up with population growth. The Fed last month upgraded its assessment of the labor market, describing it as continuing to “improve, with solid job gains and declining unemployment.”
Average hourly earnings increased 5 US cents, or 0.2 percent, last month after being flat in June. That put them 2.1 percent above their year-ago level, but left them well shy of the 3.5 percent growth rate economists associate with full employment.
Still, the gain supports views that a sharp slowdown in compensation growth in the second quarter and consumer spending in June were temporary. Economists polled by Reuters had forecast nonfarm payrolls increasing 223,000 last month and the unemployment rate holding steady at 5.3 percent.
Wage growth has been disappointingly slow. But tightening labor market conditions and decisions by several state and local governments to raise their minimum wage have fueled expectations of a pickup.
Also, a number of retailers, including Walmart, the nation’s largest private employer, Target and TJX Cos have increased pay for hourly workers.
The jobless rate is near the 5 percent to 5.2 percent range most Fed officials think is consistent with a steady but low level of inflation.
A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell to 10.4 percent, the lowest since June 2008, from 10.5 percent in June.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, held at a 37-year low of 62.6 percent.
The fairly healthy employment report added to robust July car sales and service industries data in suggesting the economy continues to gather momentum after growing at a 2.3 percent in the second quarter.
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