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Employers Add 215000 Jobs During July
“We don’t have the tools to be able to address the structure of unemployment across groups, but a stronger economy generally really does tend to be beneficial to all Americans and that’s what we are working towards”, she said. The addition of the word “some” to the statement was intended to imply a slightly lower threshold for the labor market than previously.
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With the job market generally moving in the right direction, the Fed is likely to stay the course in its plans to raise short-term interest rates soon.
Stock prices on Wall Street slumped in early trading, but mostly because the July job numbers add pressure on the U.S. central bank to start raising interest rates. The EconoTimes content received through this service is the intellectual property of EconoTimes or its third party suppliers.
Interest rates futures fell on the day but held above their session lows, while Treasury bill rates climbed with the six-month rate hitting its highest level since late 2010. The Labor Department began tracking unemployment for blacks in 1972. That is close to the 5 to 5.2 percent range the Fed views as normal for maximum employment over the longer run.
“Trend job growth is rock solid”, said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, which correctly forecast the increase in payrolls. This represents a moderate growth from June, where there was a gain of 223,000 jobs, which was later revised to 231,000.
The last time labor participation reached that low was 38 years ago, in October 1977.
The long-run normal rate cannot be measured directly and economists can only estimate its level, which they presume shifts over time.
Average hourly earnings increased by five cents, or 0.2%, after being flat in June.
After Friday’s report, it looks like the Fed and the economy successfully crossed the first major checkpoint in a crucial stretch of economic data before the Federal Reserve’s meeting between September 16-17.
Economists expected US employment to have grown by 225,000 jobs last month, and for the unemployment rate to hold at a seven-year low of 5.3%.
A new era of higher rates on home and vehicle loans, steeper borrowing costs for businesses and the government – maybe even a bit more return for savers – is about to arrive.
It’s enough to keep the Fed on track to raise rates in September but it’s not enough to end the debate.
An additional 14.4 million people have left the job market, either through abandoning their job searches or through going into retirement.
The proportion of adults who either have a job or are looking for one has also stabilized recently.
Statistics from the Labor Department indicate that hiring figures were most impressive in the retail and healthcare sectors, while the mining space continued its downward turn.
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Over the last 12 months, wages have risen at an annual rate of 2.1 percent, not much more than the already low underlying rate of inflation. “One worry: higher interest rates might strengthen an already strong dollar and further damage large U.S. companies such as manufacturers that rely heavily on export sales”.