US payrolls increase more than expected in July, wages rise

Author: ReutersFri, 2017-08-04 19:40ID: 1501854060517689100
WASHINGTON: 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 next month a plan to start shrinking its massive bond portfolio.
The Labor Department said that nonfarm payrolls increased by 209,000 jobs last month amid broad gains. June’s employment gain was revised up to 231,000 from the previously reported 222,000.
Average hourly earnings increased nine cents, or 0.3 percent, in July after rising 0.2 percent in June. That was the biggest increase in five months. Wages increased 2.5 percent in the 12 months to July, matching June’s gain.
Average hourly earnings have been trending lower since surging 2.8 percent in February.
Lack of strong wage growth is surprising given that the economy is near full employment, but July’s monthly increase in earnings could offer some assurance to Fed officials that inflation will gradually rise to its 2 percent target.
Economists expect the Fed will announce a plan to start reducing its $4.5 trillion portfolio of Treasury bonds and mortgage-backed securities in September.
Sluggish wage growth and the accompanying benign inflation, however, suggest the US central bank will delay raising interest rates again until December. The Fed has raised rates twice this year, and its benchmark overnight lending rate now stands in a range of 1 percent to 1.25 percent.
Economists polled by Reuters had forecast payrolls increasing by 183,000 jobs in July and wages rising 0.3 percent.
Wage growth is crucial to sustaining the economic expansion after output increased at a 2.6 percent annual rate in the second quarter, an acceleration from the January-March period’s pedestrian 1.2 percent pace.
The unemployment rate dropped one-tenth of a percentage point to 4.3 percent, matching a 16-year low touched in May.
It has declined four-tenths of a percentage point this year and matches the most recent Fed median forecast for 2017. July’s decline in the jobless rate came even as more people entered the labor force.
Main category: Business & EconomyTags: USeconomylaborjobsunemploymentpayrollrelated_nodes: Amazon in sign of growth holds huge US jobs fairUS payrolls gains beat expectations, wages riseSolid US employment report a green light for rate hike

Show More

Related Articles