July’s non-farm payroll numbers were announced on Friday and were better than expected. U.S. employers hired at a steady pace during the month indicating some underlying strength for the labor market despite a host of mixed economic signals.
Employment figures rose by a seasonally adjusted 255,000 last month, the Labor Department said, surpassing the 180,000 jobs predicted by economists and adding 18,000 more jobs in May and June than previously estimated.
In a speech given last week, Federal Reserve Bank of Dallas president Robert Kaplan said, "This deceleration from last year's 200,000-plus pace should not be unexpected as the economy has moved closer to full employment."
The unemployment rate held steady at 4.9 percent, though a more encompassing measure that includes those not actively looking for work and those working part-time for economic reasons moved up a notch to 9.7 percent. The labor force participation rate ticked up one-tenth to 62.8 percent in July from 62.7% in June as those counted as not in the labor force decreased 184,000 to 94.3 million. Participation numbers have been hovering near the lowest levels in almost 40 years, partly because the Baby Boom generation is retiring but also because some younger workers have given up on finding a job.
A tighter job market creates more competition among employers and result in higher wages. As such, average hourly earnings for private-sector workers rose by 8 cents, or 0.3%, from June to July to $25.69. From a year earlier, average hourly earnings were up 2.6%, outpacing inflation. The consumer price index increased 1.1% in June from a year earlier. The average workweek last month rose 0.1 hour to 34.5 hours.
Economists surveyed earlier this year estimated that the U.S. needed to add only 145,000 jobs each month to keep up with growth in the workforce. During the last six months, however, an unexpected weak gross domestic product in addition to falling business investment, a troubled energy sector and unsettled global markets including Brexit, drew extras attention on Friday’s jobs report which came in as a welcome surprise.
Job gains in July were broad-based. Professional and business services with sectors such as computer design and engineering services, health care, finance, food services, construction, manufacturing and government all adding jobs. The mining sector, which includes the oil and gas industry, continued to shrink.
Curt Long, chief economist at the National Association of Federal Credit Unions believes that "The labor market should remain strong as long as consumers maintain their robust spending pace."