A robust monthly jobs report is pointing to the US economy strengthening.
It shows the economy from a labour perspective is heading in the direction that the Fed wantsChief economist at Fannie Mae
Employers there added 255,000 thousand people to their payrolls (excluding agriculture) in July.
That was much better than the forecast by economists of 180,000 new posts being created.
In addition June’s hiring figure was revised upwards – by 5,000 – to 292,000.
There were increases across the board – in manufacturing, construction, and services.
The unemployment rate was unchanged at 4.9 percent of the workforce as more people entered the labour market.
Average hourly wages rose by a healthy eight cents to $25.69, that is up 0.3 percent from a month earlier, which should help to underpin consumer spending.
The average work week also increased.
Support for Federal Reserve rate hike
The strong numbers should reinforce the US central bank’s confidence that the labour market is getting close to full employment.
The head of the Federal Reserve Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.
She sees full employment as a benchmark for judging the US economy is truly recovering from the 2007-09 recession and raises the probability of an interest rate hike from the Federal Reserve this year.
“It looks like a pretty strong report overall. It shows the economy from a labour perspective is heading in the direction that the Fed wants. It gives the Fed some support for those looking for an increase in rates by the end of the year,” said Doug Duncan, chief economist at Fannie Mae in Washington.
What the US jobs report means for the Fed — Wall St reacts https://t.co/nxwybdxPr6— Financial Times (@FinancialTimes) August 5, 2016
The dollar jumped against the euro and the yen after the data were released, and Wall Street opened higher.
Sector by sector
Manufacturing sector employment increased by 9,000 jobs in July after adding 15,000 positions in June. Construction payrolls rose 14,000 following three consecutive months of declines. Mining shed a further 7,000 jobs in July.
Professional and business services, a high wage sector, added a strong 70,000 jobs last month, the most since last October. Retail sector employment increased by 14,700 jobs and payrolls in the leisure and hospitality sector rose by 45,000.
Temporary-help jobs, a harbinger of future hiring, increased 17,000. Healthcare and social assistance payrolls rose by 48,800 jobs, extending the prior month’s hefty gains. Government employment increased by 38,000 jobs.