The jobs report beat estimates again, with the US economy adding 943K jobs in July, ahead of the expected 870K new jobs and June’s headline-grabbing 850K addition. Further, June’s numbers were revised upwards from 850K to 938K. The new jobs are a welcome acceleration while the economy is now still 5.7M jobs short of pre-pandemic levels (1.7M of which is focused on the leisure and hospitality industry).
The unemployment rate dropped a half a point to 5.4%, fueling speculation that a quickly dropping unemployment rate could pull forward the Fed’s discussion on tapering or other policy changes, though changes here might be unlikely until the fall when more labor uncertainty is expected to be resolved.
Wage growth seems to be strong as well, with a 0.4% increase in average hourly earnings (5.2% annualized over the last three months) even though a significant portion of jobs gains have been in the lower-paid hospitality sector.
Manufacturing and Services surveys continued to stay solidly in expansionary territory with the ISM and Markit surveys for both near 60 or higher (readings above 50 indicate expansion).