U.S. payrolls gains beat
expectations, wages rise
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[August 05, 2016]
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. employment
increased more than expected in July and wages picked up, which
should bolster expectations of an acceleration in economic growth
and raise the probability of an interest rate hike from the Federal
Reserve this year.
Nonfarm payrolls increased by 255,000 jobs last month as hiring rose
broadly after an upwardly revised 292,000 surge in June, the Labor
Department said on Friday.
The unemployment rate was unchanged at 4.9 percent as more people
entered the labor market. Highlighting labor market strength,
average hourly wages increased a healthy eight cents. May payrolls
were revised up to 24,000 from the previously reported 11,000.
Economists polled by Reuters had forecast payrolls increasing
180,000 in July and the unemployment rate dipping one-tenth of a
percentage point to 4.8 percent.
Last month's strong job growth should reinforce the Fed's confidence
in a labor market that officials view as at or near full employment.
Fed Chair Janet Yellen has said the economy needs to create just
under 100,000 jobs a month to keep up with population growth.
The second straight month of robust job gains is a boost to an
economy after growth averaged a 1.0 percent annual rate in the last
three quarters. After a policy meeting last month, the Fed described
the labor market as having "strengthened" and said it appeared it
was still tightening.
The U.S. central bank raised interest rates at the end of last year
for the first time in nearly a decade, but has held them steady
since amid concerns over persistently low inflation. Most economists
expect another rate hike in December, though financial markets have
almost priced out that possibility.
The 0.3 percent increase in average hourly earnings left the
year-on-year gain at 2.6 percent.
The payrolls data added to July auto sales in underscoring the
economy's sound fundamentals. Economic growth is expected to
accelerate to at least a 2.5 percent annualized rate in the second
[to top of second column]
A job seeker (L) talks with a corporate recruiter (R) as he peruses
the man's resume at a Hire Our Heroes job fair targeting unemployed
military veterans and sponsored by the Cable Show, a cable
television industry trade show in Washington, June 11, 2013.
REUTERS/Jonathan Ernst/File Photo
But with the bulk of labor market slack largely absorbed and the
economy's recovery from the 2007-2009 recession showing signs of
aging, payroll gains will probably drift to average between 150,000
and 160,000 jobs per month later this year, economists say.
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. While mining
shed a further 7,000 jobs in July.
Other details of the employment report showed a rise in the labor
force. That raised the participation rate, or the share of
working-age Americans who are employed or at least looking for a
job, by one-tenth of a percentage point to 62.8 percent.
(Reporting by Lucia Mutikani; Editing by Paul Simao) ((Lucia.Mutikani@thomsonreuters.com;
1 202 898 8315; Reuters Messaging: firstname.lastname@example.org)
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