US econ­omy added 215,000 jobs in July; un­em­ploy­ment 5.3%

The China Post - - FRONT PAGE - BY JOSH BOAK

U.S. em­ploy­ers added a solid 215,000 jobs in July, sig­nal­ing a steadily ris­ing job mar­ket and likely nudg­ing the Fed­eral Re­serve closer to rais­ing in­ter­est rates in Septem­ber.

The U.S. La­bor Depart­ment also said Fri­day that the un­em­ploy­ment rate held at a rel­a­tively low 5.3 per­cent for a sec­ond straight month.

Monthly job growth has av­er­aged 211,286 so far this year, in­di­cat­ing that em­ploy­ers are con­fi­dent that the six-year re­cov­ery from the Great Re­ces­sion will sus­tain strong con­sumer de­mand and re­quire more work­ers.

July’s job growth roughly matched ex­pec­ta­tions, and the early re­ac­tion on Wall Street be­fore trad­ing opened was muted. Stock in­dex fu­tures dipped, and U.S. gov­ern­ment bond yields were lit­tle changed.

“Another solid jobs re­port sug­gests the econ­omy is gain­ing strength and keeps the Fed on track to raise rates as early as the next meet­ing” in Septem­ber, Sal Gu­atieri, se­nior economist at BMO Cap­i­tal Mar­kets, said in a re­search note.

Hir­ing has re­mained ro­bust even though the econ­omy’s over­all growth rate has been sub­par and pay raises have been mod­est for many work­ers. Av­er­age hourly earn­ings in July in­creased just 2.1 per­cent from a year ear­lier.

The Fed has held its key short­term rate near zero since late 2008, a pol­icy in­tro­duced af­ter the fi­nan­cial cri­sis to try to en­er­gize the econ­omy through stronger bor­row­ing, in­vest­ing and spend­ing. Now, more than a half-dozen years into the re­cov­ery, Fed­eral Re­serve Chair Janet Yellen has sug­gested that the econ­omy not only can tol­er­ate but needs higher rates.

Many Amer­i­cans Re­main Anx­ious

Even as the Fed has nearly con­cluded that the econ­omy is strong enough to with­stand higher bor­row­ing rates, many Amer­i­cans re­main anx­ious about a re­cov­ery de­fined by mod­est eco­nomic growth and mea­ger pay raises.

The mis­giv­ings about the econ­omy were on dis­play Thurs­day night at the first op­po­si­tion Repub­li­can Party pres­i­den­tial de­bate, where 10 can­di­dates in Cleve­land dis­cussed the chal­lenges of an un­wieldy tax code and the pres­sures on Amer­i­can work­ers re­sult­ing from immigration and global trade.

The econ­omy grew at an ane­mic 1.5 per­cent an­nual rate in the first half of 2015 — nearly half a per­cent­age point weaker than the av­er­age of the past three years.

Com­pa­nies are lay­ing off fewer and fewer work­ers: The monthly av­er­age of peo­ple seek­ing un­em­ploy­ment ben­e­fits re­mains nears a 15-year low, the gov­ern­ment said Thurs­day. But av­er­age hourly wage growth of 2.1 over the past year has barely ex­ceeded low in­fla­tion.

The pace of hir­ing has man­aged to help re­vive hous­ing and auto sales, ac­cord­ing to in­dus­try re­ports. Still, the ab­sence of sig­nif­i­cant pay raises has lim­ited the con­sumer spend­ing that ac­counts for a ma­jor­ity of eco­nomic ac­tiv­ity.

Still, the jobs re­port in­di­cated that com­pa­nies are an­tic­i­pat­ing higher con­sumer spend­ing. Re­tail­ers added 35,900 work­ers last month and restau­rants 29,300.

Ris­ing home sales helped boost con­struc­tion jobs by 6,000. Man­u­fac­tur­ers added 15,000 em­ploy­ees, with food, plas­tics and rub­ber fac­to­ries ac­count­ing for most of the in­crease.

Job se­cu­rity also ap­pears to be im­prov­ing. The busi­ness ser­vices sec­tor — which em­braces ev­ery­thing from lawyers to ac­coun­tants to engi­neers — added 40,000 work­ers, even though the num­ber of tem­po­rary em­ploy­ees on short­term con­tracts fell 8,900.

Lower ga­so­line and oil prices have yet to pro­vide the kind of boost they have in the past. Energy com­pa­nies re­sponded to oil of less than US$50 a bar­rel by cut­ting or­ders for equip­ment and pipe­lines, caus­ing many man­u­fac­tur­ers to slow their hir­ing. And in­stead of spend­ing their sav­ings at the ga­so­line pump, con­sumers have mostly pock­eted the ad­di­tional cash.

The strong U.S. dol­lar has also weighed on eco­nomic growth. It has risen about 14 per­cent in value against over­seas cur­ren­cies in the past year, thereby cut­ting into ex­ports by mak­ing U.S. goods costlier over­seas

Fall­ing un­em­ploy­ment usu­ally re­duces the num­ber of peo­ple avail­able to hire, which then forces em­ploy­ers to boost wages. But many frus­trated job seek­ers have stopped look­ing for work, per­haps only tem­po­rar­ily. This has made it hard to as­sess just how healthy the job mar­ket is and when pay might rise at a faster rate.

Roughly 8.3 mil­lion Amer­i­cans are still look­ing for jobs. An ad­di­tional 14.4 mil­lion peo­ple have left the job mar­ket — ei­ther aban­don­ing their job searches or choos­ing to re­tire — since the re­ces­sion of­fi­cially be­gan in late 2007. The re­sult is that the share of adults work­ing has fallen to 59.3 per­cent from 62.7 per­cent eight years ago.

One chal­lenge is that work­ers have be­come less pro­duc­tive for each hour worked. This lim­its the will­ing­ness and abil­ity of many com­pa­nies to raise pay sig­nif­i­cantly, which can then pre­vent peo­ple side­lined by the re­ces­sion from re­turn­ing to the job mar­ket.

Pro­duc­tiv­ity fell at a 3.1 per­cent an­nual rate in the first three months of 2015.

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