While the U.S. unemployment rate in July was unchanged at 5.3%, 215,000 new jobs were created, the Labor Department said Friday, raising speculation that the Federal Reserve will begin raising interest rates this fall.
Economists surveyed by MarketWatch had expected a seasonally adjusted 220,000 increase in nonfarm jobs.
“While the report was not overwhelming in strength, it showed the economy and the labor market to be performing well,” Michael Moran, chief economist of Daiwa Capital Markets America, told MarketWatch.
The July employment report offered some guidance to the Fed, which had wanted to see “some further improvement” in the labor market before it raises interest rates for the first time in almost a decade.
“With the economy getting healthier, the central bank thinks the time is near to raise rates,” MarketWatch said. “One worry: higher interest rates might strengthen an already strong dollar and further damage large U.S. companies such as manufacturers that rely heavily on export sales.”
Job gains in July occurred in retail trade, health care, professional and technical services, and financial activities, the Labor Department said.
Over the year, the unemployment rate and the number of unemployed persons are down by 0.9 of a percentage point and 1.4 million, respectively. In July, the number of long-term unemployed — those jobless for 27 weeks or more — was little changed at 2.2 million. These individuals accounted for 26.9% of the unemployed. Over the past 12 months, the number of long-term unemployed is down by 986,000.
“We view [the July jobs] report as easily clearing the hurdle needed to keep the Fed on track for a September rate hike,” Rob Martin, an economist at Barclays, wrote in a note to clients. “We view the bar for not moving as now much higher.”
The New York Times said one negative in the report is that the proportion of Americans in the workforce did not bounce back in July after declining in recent months. At 62.6%, it remains at levels not seen since the late 1970s.
“At this stage, the Federal Reserve is looking for confirmation,” said Ethan Harris, co-head of global economics at Bank of America Merrill Lynch. “They don’t need to see additional strength, and this report pushes them one step closer.”