Strong US jobs report bolsters case for further Fed tightening


There's lots to like in July's jobs report.

US economy maintained solid job growth in July and the unemployment rate dropped to 16-year low.

The labor-force participation rate, a measure of the share of people with jobs or looking for employment, was 35% for teens in July. There are still people who should be in the work force who aren't, and that drag is holding down wage growth because of the impact that sidelined labor has on pricing.

That may be holding down wages overall, but it's still a good sign that people are able to find work.

Food services, drinking places, professional and business services, and health care all saw gains.

The average workweek for all employees was unchanged month over month at 34.5 hours.

Average hourly earnings rose by 9 cents to $26.36 in July. Wage growth rose 2.5% in July from a year earlier, not awesome but steady and right in line with expectations.

A construction worker stands in New York City.The July jobs report, released by the Labor Department on Friday, showed little change from June's statistics.

So far, this year has been more consistent than the previous year, but lacks the amplitude of job growth seen in those figures. The jobless rate here has climbed more than a full point since the start of the year, having risen all but one month since hitting a low of 2.9 percent in November. In leisure and hospitality, which typically carries lower pay, annual wage gains of 3.8 percent outpaced the average.

Texas Roadhouse (TXRH) is seeing 6% wage growth and an even-greater increase in compensation costs when non-wage benefits are included. In June, there were 6,977,000 who were unemployed and in July that number grew to 6,981,000. "And most economists would like to see wages rising more quickly". What's more, employers boosted wages.

US employers hired more workers than expected in July and raised their wages, signs of labor market tightness that likely clears the way for the Federal Reserve to announce a plan to start shrinking its massive bond portfolio.

There was also solid job growth in the United States last month with 209,000 jobs added, well above expectations.

Cathy Barrera, the chief economic adviser for the online jobs platform ZipRecruiter based in Santa Monica, Calif., has been concerned about younger workers lagging behind since the recovery from the recession.

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