U.S. created more jobs than expected in July, unemployment falls to 4.3%

Written on Aug 08, 2017

The U.S. economy continued its strong summer trend, adding 209,000 jobs in July while the unemployment rate fell to 4.3%, the lowest since March 2001, according to a government report issued Aug. 4.

Economists surveyed by Reuters had expected the report to show growth of 183,000; the unemployment rate met expectations. A more encompassing rate that includes discouraged workers and the underemployed was unchanged at 8.6%.

The number of employed Americans hit a new high of 153.5 million thanks to a surge of 345,000. The employment-to-population ratio also moved up to 60.2%, tied for the highest level since February 2009.

Stock market futures liked the news, rising to indicate a positive open, while government bond yields also moved considerably higher.

The closely watched wage number was unchanged from previous months, with average hourly earnings up 2.5% on an annualized basis. The average work week also was unchanged at 34.5 hours.

Bars and restaurants provided the biggest boost for the month with 53,000 more positives, while professional and business services contributed 49,000, the Bureau of Labor Statistics said.

In addition to the strong July report, June's 222,000 gain was revised up to 231,000, although May was cut from 152,000 to 145,000.

Significant job gains also came from health care, with 39,000.

The one weak point in the report came from the distribution of jobs to lower-income sectors. Job creation was strongly tied to part time, which gained 393,000 positions, while full time fell by 54,000.

Those counted as not in the labor force fell by 156,000 to 94.7 million while the labor force itself surged by 349,000 to 160.5 million.

The report comes with the economy at a crossroads. While job gains have continued apace during the Trump administration, wage increases have remained tepid as the president has promised growth closer to 3% than the average 1.9% so far this year.

The Federal Reserve is watching the numbers closely, particularly for wage increases. The central bank has indicated it plans one more interest rate hike this year as well as the beginning of its program to unwind the bond portfolio it accrued while trying to stimulate the economy out of the financial crisis.

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