The economy added 215,000 jobs in July, the Labor Department reported Friday, while the unemployment rate held at 5.3 percent—numbers unlikely to dissuade the Federal Reserve from raising interest rates in September.
The Fed signaled in June that it required “some further improvement” in the economy before raising its rock-bottom rates. Analysts had generally considered any job gains over the 200,000 mark to meet the Fed’s expectations.
CNBC reported Fed funds futures to point to a 55 percent chance of a September hike, up from 47 percent before the jobs numbers were released.
“Trend job growth is rock solid,” Bloomberg quoted Moody’s senior economist Ryan Sweet saying. “It’s more than sufficient to continue to chip away at the slack that’s left in the job market.” But Elise Gould, a senior economist at the left-leaning Economic Policy Institute, noted that nominal average hourly earnings—“the arguably most important measure for the Fed”—was up only 2.1 percent over the year, “in line with the same slow growth we’ve seen” since the end of the Great Recession.
On this last point, House Speaker John Boehner seemed to agree. “Wages are flat, incomes are down, and more Americans are in poverty than when the president took office,” he said in a written statement. “We can do better.”
Jason Furman, chairman of the White House Council of Economic Advisers, noted “the rapid pace of recent growth” but acknowledged “some slack left over from the financial crisis remains in our labor market…. That’s why the President is committed to pushing Congress to increase investments in infrastructure as part of a long-term transportation reauthorization, opening new markets for U.S. goods and services through expanded trade, providing relief from the sequester, and raising the minimum wage.”
Average hourly private-sector earnings were up 5 cents; in June they were unchanged. A Bloomberg survey of economists had predicted the creation of about 212,000 jobs, an unemployment rate of 5.3 percent, and an increase in hourly earnings of 0.2 percent.
The payroll company ADP estimated Wednesday based on its own records that July job growth in the private sector was 185,000, down from its June calculation of 229,000.
The jobs report followed news last week from the Commerce Department that Gross Domestic Product increased 2.3 percent during the second quarter of 2015, an improvement over the first quarter’s 0.6 percent but a less than fully robust growth rate, reflecting weak business investment.
Economists also saw continued weakness in the labor force participation rate, which remained unchanged from last month at 62.6 percent. That’s the lowest level since 1977.