WASHINGTON – U.S. employers added a healthy 255,000 jobs in July, a sign of confidence amid sluggish economic growth that points to a resilient economy.
At the same time, the unemployment rate remained a low 4.9 per cent, the Labor Department said Friday in its monthly jobs report. More Americans launched job searches, and nearly all were hired. But the influx of job seekers meant that the number of unemployed fell only slightly.
The figures suggest that U.S. employers shook off concerns about Britain’s late-June vote to quit the European Union. Nor were they apparently discouraged by the economy’s tepid growth in the first half of the year: Just 1 per cent at an annual rate. The solid hiring could fuel an economic rebound in the second half of this year, with more paychecks and higher pay fueling spending and growth.
Stock index futures rose after the jobs report was released, a signal that investors may feel more encouraged by prospects for corporate earnings.
“Even as economic growth has been lacklustre, the job market has remained sparkling bright,” said James Marple, a senior economist at TD Bank.
Some economists raised the possibility that the job gains will embolden the Federal Reserve to resume raising rates later this year, though perhaps not before December. The Fed raised its benchmark rate from a record low in December last year but has since held that rate steady in the face of economic uncertainty.
“These job numbers are good enough to keep the Fed on track for a December rate increase despite sluggish GDP growth in the first half of this year,” said Scott Anderson, chief economist at the Bank of the West.
Average hourly pay picked up in July and is 2.6 per cent higher than it was a year ago, matching the fastest pace since the recession. With the unemployment rate low, that suggests that employers are being forced to compete with one another for new hires by offering higher pay.
Solid hiring occurred last month across a range of industries, including middle- and high-wage jobs, one factor that likely boosted average pay. Professional and business services, which includes architects, engineers and managers, added 70,000 jobs, the most since October.
Financial services added 18,000 and construction 14,000. Government positions rose 38,000, the most in more than a year.
Health care, which includes jobs at all pay levels, gained nearly 49,000 new jobs. Hotels and restaurants added 27,000.
July’s robust job gain may be enough to reassure investors — and perhaps Federal Reserve policymakers — that the economy will pick up. Its growth has been weak since last fall. The economy has been driven by consumers, who ramped up spending in the April-June quarter at the second-fastest pace since the recession.
Many analysts expect the economy to rebound in the second half of the year, with one of the most optimistic estimates coming from the Federal Reserve Bank of Atlanta: It predicts that annualized growth will reach 3.7 per cent in the current July-September quarter.
Public perceptions of the economy have been largely negative during this election season despite low unemployment. A top adviser to Donald Trump said last week that the annual economic growth rate of just 1.2 per cent in the April-June quarter was “catastrophic.”
Hillary Clinton has tended to credit the Obama administration for rescuing the economy from the Great Recession but has also said “none of us can be satisfied with the status quo.”
Other recent economic data have been mixed. Americans are confident enough to step up home purchases, aided by near-record-low mortgage rates. Sales of existing homes reached a nine-year high in June, and sales of new homes accelerated to an eight-year high.
Services companies, which range from retailers to banks to shipping firms, expanded at a healthy pace in July, according to a survey by the Institute for Supply Management, a trade group. Their expansion slowed a bit from the previous month. But new orders picked up, a sign that growth could remain healthy.
But manufacturing continues to struggle and is weighing on hiring. Factories received fewer orders in June for a third straight month. Weak growth overseas and a stronger dollar have cut into many companies’ overseas businesses. And auto sales have levelled off, according to data released this week.
The slowdown in manufacturing has cost jobs: Factory employment has fallen about 30,000 in the past year, depriving the economy of key middle-income positions.
Job growth has been stronger in higher-income occupations, such as managers, engineers and accountants. Lower-wage jobs at hotels, restaurants and retail stores have also grown at a healthy pace. Both trends add to a long-running dynamic that has caused hiring for middle-income jobs to lag behind hiring for high- and low-paying positions.
AP Economics Writer Josh Boak contributed to this report.