Economists and analysts widely praised July’s Employment Situation from the Bureau of Labor Statistics released Friday, not just for the headline number, but also for the majority of the data contained within.
Payrolls added 255,00 jobs added in July, which beat MarketWatch’s forecasted number of 185,000 by 70,000. July’s job gains, combined with June’s upwardly revised total of 292,000, brought the average monthly job gain for May through July up to 190,000 despite May’s dismal showing (24,000 after an upward revision).
It was not all about the job gains, however; July’s employment summary also contained strong wage growth (an increase of 8 cents up to $25.69 per hour, and an over-the year increase of 2.6 percent) and the unemployment rate stayed below 5 percent at 4.9. The labor force participation rate, which has been hovering right above a four-decade low, nudged up to 62.9 percent.
“Strong job growth is clearly a positive sign, said the Collingwood Group Managing Director Tom Booker. “It tempers recession fears, a key concern among home owners. “It’s all about raising ‘more boats’ in cities and rural areas where job growth has been lagging and what those jobs pay.”
The more comprehensive U-6 unemployment rate, which includes the total unemployed plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, bumped up by 10 basis points from June to July (9.6 percent to 9.7 percent) but is still way down its post-recession peak of higher than 17 percent and is down by a full percentage point (10.7 percent) from July 2015.
“It’s rare to have a jobs report with a strong headline, yet so few blemishes in the details, and we got one today,” Fannie Mae Chief Economist Doug Duncan said. “With upward revisions to prior months’ job gains, annual wage growth tying a seven-year best, an improved participation rate, and a longer workweek, the report gives support to those on the Fed hoping to increase rates this year, especially if the numbers are supported in future releases. The report should help soothe concerns over the health of businesses, which have seen sustained declines in capital expenditures.”
On the housing side, the data from July’s employment situation is in line with predictions of recent economists that home prices will continue to increase at their current appreciation rate of higher than 5 percent for the next year.
“Strengthening job and wage growth are positives for the demand side of the housing market, but weak residential construction hiring is worrisome from a supply perspective,” Duncan said. “Together, these developments suggest continued strong home price appreciation.”
While the numbers from July’s report were mostly positive, some still doubt it will be enough to convince the decision makers at the Federal Reserve to raise the federal funds target rate before December.
“This was another strong report that checked most, if not all of the significant boxes. Aside from the strong figure for job growth, labor force participation and year-over-year wage growth each ticked up slightly,” said Curt Long, Chief Economist at the National Association of Federal Credit Unions. “The labor market should remain strong as long as consumers maintain their robust spending pace. While this was a second consecutive strong jobs report, it will not be enough to move the needle for the Fed. For those policy makers in the ‘wait and see’ camp, poor GDP growth and weak inflation provide enough justification for waiting at least until December for the next rate hike.”