Strong Employment Report Boosts Gains in Spending, Housing

Total nonfarm payroll employment rose by 255,000 in July, the Bureau of Labor Statistics reported Friday.

The unemployment rate remained unchanged at 4.9 percent. The number of unemployed also was unchanged at 7.8 million.

BLS reported job gains in professional and business services, health care and financial activities. In particular, employment in financial activities rose by 18,000 in July and has risen by 162,000 over the past year.

BLS revised May payroll employment numbers from +11,000 to +24,000 and June numbers from +287,000 to +292,000. With these revisions, employment gains in May and June combined were 18,000 more than previously reported. Over the past three months, job gains averaged 190,000 per month.

Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 59.7 percent, changed little in July. The number of persons employed part time for economic reasons also held steady at 5.9 million in July. The number of persons unemployed less than five weeks decreased by 258,000. At 2.0 million, the number of long-term unemployed (those jobless for 27 weeks or more) was about unchanged over the month and accounted for 26.6 percent of the unemployed.

Mark Silvia, chief economist with Wells Fargo Securities, Charlotte, N.C., said job growth remains consistent with 2 percent growth and a Federal Open Market Committee move on the federal funds rate in December.

“This pace supports continued gains in consumer spending and housing, which should help sustain moderate economic growth at 2 percent,” Silvia said. “Keeping the Fed patient are further signs that the easy stance of monetary policy in recent years is helping to draw sidelined workers back into the labor force.”

BLS reported the average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.5 hours in July. In manufacturing, the workweek was unchanged at 40.7 hours, while overtime increased by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls also increased by 0.1 hour to 33.7 hours.

The report said average hourly earnings for all employees on private nonfarm payrolls increased by 8 cents to $25.69. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.59.

“We expect the Fed to remain on hold over the next few meetings, but this report supports our call for a December rate increase,” Silvia said. “While the trend in job growth has slowed over the past year, it remains sufficient in putting downward pressure on the unemployment rate. With the participation rate more stable and average hourly wages strengthening, the Fed can be more assured the labor market is at full employment.”