The government also said employers added 14,000 more jobs in May and June than previously estimated.
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RBS analysts agreed. “This is another solid report that, in our view, meets the criteria for “some further improvement” in labor market conditions and thus will keep the Fed in play in September“.
Persistently low interest rates and subpar inflation leave “less scope for the (Fed) to respond” by cutting short-term rates to “counteract a weakening in the economy”, Fed Chair Janet Yellen said last month.
That doesn’t mean the Fed won’t raise rates.
EUROPE AND ASIA: European stocks remained mostly lower after the jobs data.
The US dollar index, which tracks the greenback versus a basket of euro, yen and four other currencies, reached 98.334, its highest since late April before turning lower to 97.604, down 0.2 per cent from Thursday.
ENERGY: The price of oil fell Friday for the sixth trading day out of the last seven as the number of rigs operating in the U.S. rose, reinforcing expectations that a global supply glut is unlikely to dissipate in the immediate future.
The steady job gains have helped reduce the jobless rate to 5.3 percent from 6.2 percent a year ago and 10 percent in 2009. And average hourly earnings rose 0.2 per cent, exactly what forecasters had expected. The economy recorded just a 1.5 per cent growth in the first half of the year, being below the last three years’ average by 0.5 per cent.
Over the past 12 months, earnings have risen by more than 2.1 percent.
“Wage growth numbers are still tame”, says O’Sullivan. Local, state and federal governments added another 5,000. The judgment call to make relies not on parsing confusing or contradictory data, but in whether is time to raise rates to prevent the economy from overheating down the road.
The unemployment rate stuck at a steady 7-year low of 5.3% as was expected.
While pockets of weakness remain – historically low levels of participation in the workforce and very sluggish wage gains for most workers – private economists said Friday that a September move by the central bank was a real possibility, especially if job creation in August turns out to be as good as or better than it was in July.
“As we get closer to September, every data (report) that’s released seems to be more and more important, and July’s U.S. job data was consistent with the trend the Fed wants to see before they decide to pull the trigger on the first rate hike”, Guitard said. The hours worked index is seen as a proxy for gross domestic product.
“We expect this report to deliver a further jolt to the Fed’s confidence in their relatively optimistic economic outlook and further solidify the bias for a September hike”, said Millan Mulraine, deputy chief economist at TD Securities in New York. In 2014, the economy was adding 240000 jobs every month between Jan and July on an average. Construction payrolls rose 6,000 thanks to a strengthening housing market, after being unchanged in June. Factory payrolls increased 15,000 as some auto makers have decided to forgo a usual summer plant shutdown for retooling, after rising 2,000 in June.
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Retail led the industries adding to headcounts in July, followed by health care and leisure and hospitality. The slowdown reflected a drop of 8,900 in temporary employment, which was the weakest reading since September 2012.
