United States: Labor market conditions improve in July
Total non-farm payrolls increased by 943,000 in July, a solid reading that beat analysts’ expectations of an 870,000 increase. This followed June’s 938,000 increase in payrolls. Employment gains occurred in leisure and hospitality, and in professional and business services.
The unemployment rate ticked down to 5.4% in July from 5.9% in June, and the labor force participation rate inched up to 61.7%, from 61.6% the month prior. Hourly earnings rose 0.4% month-on-month in July (June: +0.4% mom), while annual wage growth accelerated to 4.0% from 3.7%. Taken together, July’s reading suggests the economy continues to recovery robustly as the pandemic dissipates and stimulus feeds demand, although there is still some way to go to recover all the jobs lost last year.
On the reading and outlook, Katherine Judge, a senior economist at CIBC Economics, noted:
“This was an all-around solid employment report, topped off by an impressive 0.6% rise in hours worked, which will likely give the Fed enough evidence of labor market progress to announce an early 2022 tapering of QE at the September meeting.”