U.S. adds 215,000 jobs in July, setting the stage for interest rate hike
According to the Bureau of Labor Statistics, the U.S. economy added 215,000 new jobs in July, and the unemployment rate remained unchanged at 5.3 percent.
Most industries added workers in July, with the exception of the energy sector as it's been largely impacted by cheap oil prices. Retail trade increased employment by 36,000, healthcare employment rose by 28,000, financial activities added 17,000 jobs and manufacturing employment increased by 15,000 jobs.
Average hourly earnings rose by 5 cents in July to $24.99, and have risen by 2.1 percent over the year. Many economists believe July job gains are strong enough for the Federal Reserve to continue with plans to raise interest rates later this year, despite only minor improvement in wage growth.
Randstad's U.S. Employee Confidence Index (ECI)
Dropping from its all-time high of 62.3 in Q1’15, Randstad’s U.S. Employee Confidence Index fell slightly to 61.9 in Q2’15—however, confidence remains high as more than half of workers (53%) say they are confident in their ability to find a new job.
U.S. Job Gains
After another month of steady growth, the U.S. economy added 215,000 jobs in July. The U.S. has added an average of 235,000 jobs a month since May, up significantly from the monthly pace of 195,000 new jobs in Q1’15. Many economists believe this sets the stage for the Federal Reserve to raise interest rates this year.
U.S. Unemployment Rate
The U.S. unemployment rate remained unchanged at 5.3 percent. However, a broader measure of U.S. unemployment that includes workers who can only find part-time work or who have stopped looking for work, decreased to an seven-year low of 10.4 percent in July.
U.S. Unemployment Rate by Industry
Most industries added workers in July with the exception of the energy sector, which has been badly impacted by oil prices. Retail trade employment increased by 36,000, healthcare increased payrolls by 28,000 and the financial industry boosted employment by 17,000.
Temporary Help Services Sector
The temporary help services sector took a hit in July, declining by 8,900 jobs to 2,893,900. The industry saw a 0.3 percent decrease from June, but is up 4.5 percent year-over-year. July’s year-on-year growth is the lowest it has been since August 2013.
Average Weekly Earnings
Average hourly earnings rose by 5 cents to $24.99 in July (+0.2%), increasing at a rate of only 2.1 percent for the year. Typically in a post-recession environment, hourly wages should grow at least 3 percent, but over the last three months, earnings have risen at a rate of only 1.9 percent.
Economists watched the July employment report very closely given its influence over whether or not the Federal Reserve will raise interest rates in September. The Fed has held the short-term interest rate near zero since late 2008, a policy introduced after the recession to try to boost the economy through stronger borrowing, investing and spending.
One of the biggest roadblocks to raising interest rates has been weak wage growth, which remains a significant factor that is restraining the economy. The U.S. gross domestic product—the total monetary value of goods and services—averaged only 1.5 percent in the first half of the year. However, consensus among economists is July’s employment numbers are solid enough to keep the Fed moving forward with plans to hike interest rates.