US sees strong job creation in July as unemployment falls

The US saw robust job creation again in July, with unemployment falling back to a 16-year low, restoring the economy to the employment level seen before the 2008 crisis.

The healthy jobs report Friday was another dose of welcome news for an embattled White House facing a stalled policy agenda and historically low public approval ratings.

Despite a government rule barring officials from commenting on economic data until one hour after release, President Donald Trump immediately hailed the report on Twitter:

"Excellent Jobs Numbers just released - and I have only just begun. Many job stifling regulations continue to fall. Movement back to USA!"

The world's largest economy added 209,000 net new positions for the month, well above analyst forecasts, although below the 231,000 increase in June, the Labor Department reported.

However, average monthly job creation so far in 2017 is 185,000, slightly below the average recorded in 2016 and well below 2015 and 2014.

 

Even so, the July gain pushed the unemployment rate back down a tenth of a point to 4.3 percent, the same as in May, when it reached its lowest level in 16 years.

However, average monthly job creation so far in 2017 is 185,000, slightly below the average recorded in 2016 and well below 2015 and 2014.

Hourly wages continued to make steady if slow progress, with a 0.3 percent increase over June, 2.5 percent higher than July 2016, the same pace as the month before.

- Reversing recession damage -

The stock market was buoyed on the report as the Dow Jones Industrial Average rose 0.3 percent to post its eighth consecutive record close. The broader S&P 500 and the tech-heavy Nasdaq each rose about 0.2 percent, also cheered by solid earnings reports throughout the week.

In research published Friday, the Brookings Institution said July's job gains meant the US economy had finally recovered from the damage done to labor markets by the Great Recession.

In raw numbers, the US has added 16 million net jobs over the last seven years, about twice the number of jobs lost during the recession, according to Labor Department figures.

But Brookings said this does not account for demographic shifts such as population growth and the growing ranks of retirees.

The report said, "by our calculations, nearly a full decade after the start of the recession, employment has returned to its demographically adjusted pre-recession level."

"This does not mean that all harm to the labor market resulting from the Great Recession has dissipated, nor that the economy is at full employment."

The rosy jobs report could ease some of the confusion among Federal Reserve policymakers, who were expected to raise interest rates a third time this year but have been left perplexed by flagging inflation even amid falling unemployment.

"The data don't change our forecast for the Fed," including "another rate hike in December," Jim O'Sullivan of High Frequency Economics said in a note to clients.

But other economists said the Fed can afford to hold off until next year to raise rates.

And John Ryding of RDQ Economics said the consumer price index due out next week will be a more important factor in the central bank's decision.

- Restaurants, health care strong -

Among other good news in the report were strong gains among prime age workers, or those aged 25 to 54, whose ranks grew by 251,000 in July.

Restaurants added 53,000 new positions, bringing the total gain for the sector over the last 12 months to 313,000. Ambulatory health care services added 30,000 jobs.

Heavy industries, however, including construction, manufacturing, transportation and the mining sector which contains the crucial oil industry -- industries that Trump has focused on -- were largely flat for the month.

Chris Low of FTN Financial said the back-to-back job gains north of 200,000 in June and July were not likely to be sustained, however.

"Job growth was solid, but nevertheless consistent with a gradual employment slowdown."

source: AFP