US economy adds nearly a million jobs

THE American economy regained nearly a million jobs in July in the sharpest monthly rise for almost a year.

The 943,000 increase in non-farm payrolls, a key measure of the US jobs market, landed 73,000 above expectations, and was accompanied by upwards revisions for June and May’s figures.

The private sector accounted for 703,000 of the jobs gained according to the Bureau for Labor Statistics, with more than half of that from the leisure and hospitality sectors. Government jobs accounted for 240,000.

It took the US unemployment rate down from 5.9pc to 5.4pc, nearly 10 percentage points lower than the 14.8pc peak hit last April.

The strong reading will build confidence among Federal Reserve officials that they can begin to remove monetary policy support from the US economy in the coming months.

Last week, the central bank said it would maintain its $120bn (£87bn) a month bond-buying programme until more “substantial” progress has been made on restoring employment and controlling inflation.

Andrew Hunter, senior US economist at Capital Economics, said the Fed may start winding down quantitative easing earlier than anticipated. “We had thought that continued slow progress on the employment recovery would see the Fed hold off tapering its asset purchases until early next year,” he said.

It may also make it tougher for Joe Biden, who has faced calls from within the Democratic party to rein in spending, to push through stimulus efforts including a $550bn infrastructure bill that will be voted this weekend.

Roughly 147m Americans were in work during July, about 5.5m below the pre-pandemic peak. A further 6.5m were actively looking for work.

Wage growth was stronger than expected, with average hourly earnings up 4pc year on year versus an anticipated 3.8pc climb.