US records strong hiring in July, jobless rate unchanged at 4.9 pct

The US jobs report released on Friday strengthens the view that the labor market in the country continues to be healthy and that the US Fed might hike rates before long, stated Nordea Bank in a research report. In July, payrolls rose 255,000, grossly surpassing market projections of a rise of 180,000. The June’s report was revised by an additional 18,000, while May’s data was revised up by 24,000.

The jobless rate continued to be stable at 4.9 percent. Even if the economic growth has been dull, the job market continued to be a bright spot. July’s job growth is more than double the level required to exert downward pressure on unemployment, noted TD Economics in a research report.

A weak economy and solid labor market forms some sort of a challenge for the US Fed. The combination implies that some of the factors behind slow economic growth are structural and will not be overcome by additional monetary stimulus. With certain stability in the US dollar, solid consumer demand should assist in raising the prospect of profit growth, incenting business to invest in additional capacity, particularly in a quickening wage growth scenario, added TD Economics.

This suggests that market expectations, which are at present not speculating another rate rise until 2017 will have to move forward.

Sector wise, private goods manufacturing services rose 16,000, with 14,000 gains recorded in construction and 16,000 in manufacturing. This rise countered the continuing losses in mining and logging that recorded a loss of 8,000. Private services industries also rose at a solid 201,000, whereas government payrolls added 38,000. Meanwhile, average hourly wages were up a strong 0.3 percent on the month and continued to be the same at 2.6 percent year-on-year.