In addition to the strong monthly gain for July, readings for the previous two months were revised higher.
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U.S. Inc.is back in job-creation mode.
The argument for the Federal Reserve to raise interest rates in September just got stronger with another bumper USA employment report. American businesses added 255,000 jobs in July (pdf), comfortably beating analyst expectations for a gain of 180,000.
Some Fed policymakers have suggested that the bank should raise rates again this year if the U.S. economy gains more momentum.
This month’s report marks yet another in a long string of overall positive news from the Bureau of Labor Statistics.
Stocks rallied on the news, with the Standard & Poor’s 500 stock index climbing above its July 22 record closing high.
With the Goldilocks economy back in vogue, the Fed has room to raise rates.
Since lifting rates in December for the first time in almost a decade, the Fed has held the target range steady at 0.25 percent to 0.5 percent as officials monitored a series of shocks to global financial markets and volatile domestic economic data.
Taken together, the report suggests the economy isn’t at risk of shedding jobs anytime soon.
At the start of the year Fed officials mused about the prospect of raising short-term interest rates four times in 2016, yet world events didn’t play along. “There are enough uncertainties out there, and this Fed will want to see a lot of supportive data before their next interest rate move”.
Although surprisingly tepid second-quarter GDP growth figures published last Friday have dented the dollar, the greenback has been recovering slowly this week.
But despite talk of a September hike, the Fed will likely play it safe and hold off on a rate increase until its December meeting – and after the presidential election, Anderson says.
Adds Sohn: “If the next payroll report before September is solid, there is a good possibility of a hike at the September meeting”. Not only was that much faster than the overall 1% rate of inflation, it even eclipsed the 2.3% rate of “core inflation” which strips out volatile energy and food prices. Under the circumstances, there is no rush.
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“The July jobs report certainly increases the odds of a September tightening, but I’d still keep them somewhat below 50 percent”, said Dean Maki, chief economist at Point72 Asset Management LP in Stamford, Connecticut and a former Fed staffer.
