U.S. economy added 255,000 jobs in July
U.S. employers added a healthy 255,000 jobs in July, a sign of confidence amid sluggish economic growth that points to a resilient economy.
At the same time, the unemployment rate remained a low 4.9 per cent, the Labour Department said Friday in its monthly jobs report. More Americans launched job searches, and nearly all were hired. But the influx of job seekers meant that the number of unemployed fell only slightly.
- Fed stands pat again, leaves key interest rate where it is
- U.S. economy adds better-than-expected 287,000 jobs in June
The figures suggest that U.S. employers shook off concerns about Britain's late-June vote to quit the European Union. Nor were they apparently discouraged by the economy's tepid growth in the first half of the year: Just 1 per cent at an annual rate. The solid hiring could fuel an economic rebound in the second half of this year, with more paychecks and higher pay fuelling spending and growth.
U.S. stocks indexes rose after the jobs report was released, a signal that investors may feel more encouraged by prospects for corporate earnings.
"Even as economic growth has been lacklustre, the job market has remained sparkling bright," said James Marple, a senior economist at TD Bank.
Some economists raised the possibility that the job gains will embolden the Federal Reserve to resume raising rates later this year, though perhaps not before December. The Fed raised its benchmark rate from a record low in December last year but has since held that rate steady in the face of economic uncertainty.
"These job numbers are good enough to keep the Fed on track for a December rate increase despite sluggish GDP growth in the first half of this year," said Scott Anderson, chief economist at the Bank of the West.
Pay picks up
Average hourly pay picked up in July and is 2.6 per cent higher than it was a year ago, matching the fastest pace since the recession. With the unemployment rate low, that suggests that employers are being forced to compete with one another for new hires by offering higher pay.
Solid hiring occurred last month across a range of industries, including middle- and high-wage jobs, one factor that likely boosted average pay. Professional and business services, which includes architects, engineers and managers, added 70,000 jobs, the most since October.
Financial services added 18,000 and construction 14,000. Government positions rose 38,000, the most in more than a year.
Health care, which includes jobs at all pay levels, gained nearly 49,000 new jobs. Hotels and restaurants added 27,000.
July's robust job gain may be enough to reassure investors — and perhaps Federal Reserve policymakers — that the economy will pick up. Its growth has been weak since last fall. The economy has been driven by consumers, who ramped up spending in the April-June quarter at the second-fastest pace since the recession.
Many analysts expect the economy to rebound in the second half of the year, with one of the most optimistic estimates coming from the Federal Reserve Bank of Atlanta: It predicts that annualized growth will reach 3.7 per cent in the current July-September quarter.
Trade gap widens
In other economic news, the U.S. trade deficit increased to the highest point in 10 months, driven up by a big rise in imports of oil and Chinese-made computers, cellphones and clothing.
The deficit rose to $44.5 billion US in June, 8.7 per cent higher than a revised May deficit of $41 billion, the Commerce Department reported Friday. It was the biggest gap between what America sells abroad and what the country imports since a $44.6 billion deficit last August.
Exports, which have struggled this year because of the strong dollar and global weakness, edged up 0.3 per cent to $183.2 billion. Imports rose a faster 1.9 per cent to $227.7 billion, led by a 19.4 per cent jump in petroleum imports.
The politically sensitive deficit with China increased to $29.8 billion, the highest in seven months.
A wider U.S. trade deficit acts as a drag on growth because it means the nation is earning less on overseas sales of U.S. exports while spending more on imported products.