US July jobs report leaves FOMC on track for September liftoff

The Bureau of Labor Statistics' (BLS) update on the employment situation in July was, for the most part, in line with Street expectations. Nonfarm payrolls expanded by a below-consensus 215K during the reference period, but previously posted job gains in May and June were boosted by 14K. Of particular note, job gains were the broadest of the year across canvassed industries.

The civilian jobless rate remained at 5.3%, while government statisticians' augmented U-6 unemployment measure dipped to a seven-year low of 10.4%. Wage gains remained tepid in July. Consistent with patterns associated with the termination date of the establishment survey, average hourly earnings edged just 0.2% higher, leaving the year-to-year growth of the closely followed nominal compensation measure at 2.1%.

Together with the addition of 210K private jobs, the extension of the mean work span of all workers to 34.6 hours boosted total hours worked by 0.5% last month, leaving July's result a solid 2.7% annualized above the spring-quarter average. Not only do hours worked point to a further pickup in growth during Q3, but also nominal income growth began the summer on a high note.

"In sum, this morning's report was clearly consistent with "some" further improvement in labor market conditions. We continue to expect the Federal Open Market Committee to raise administered monetary policy rates at the September 16-17 meeting",says Societe Generale.