The number of jobs created in the U.S. posted its sixth straight month of being above the 200,000 mark in July but the number was softer than the previous month’s level.
Labor Department figures issued Friday show payrolls increased by 209,000 while the U.S. unemployment rate moved up one tenth of a percentage to 6.2%, as more people entered the labor market. This follows 298,000 jobs being added in June.
Figures for June and May were also revised upward showing 15,000 more jobs were created that reported earlier.
Over the past 12 months, the unemployment rate and the number of unemployed persons have declined by 1.1 percentage points and 1.7 million, respectively.
For-hire trucking added 2,300 jobs in July while the June figures was revised upward. The wider transportation and warehousing sector saw nearly 7,900 job additions while the June level was revised downward.
“While certainly welcomed improvement, from the Federal Reserve’s perspective it’s not just about the headline number, it is about the composition of jobs and whether or not an increase in the quality of employment is translating into wage pressures,” said Lindsey Piegza, Chief Economist for the investment firm Sterne Agee.
She pointed out in the latest Federal Open Market Committee statement, the Fed was optimistic regarding the recent improvement in the economy, as well as their expectations for growth going forward, but the biggest impediment to both the recovery and the Fed’s willingness to raise interest rates remains the “underutilization of labor market resources.”
“This morning’s employment report, looking beyond the headline number, continues to justify the Fed’s accommodative position. Despite headline employment growth, average hourly earnings remain stagnant, the augmented unemployment rate remains elevated and the participation rate is disappointingly low,” Piegza said.
Wall Street on Thursday was concerned about the jobs report due to fears that if unemployment was shown to be falling fast, it could cause the Federal Reserve to further taper its bond buying program and raise interest rates sooner than planned. This caused the stock market on Thursday to have one of biggest single-day drops of the year.
Meantime, a separate report, also issued Friday, shows economic activity in the manufacturing sector expanded in July for the 14th consecutive month, according the nation's supply executives, hitting its fastest pace since April 2011.
The Institute for Supply Management’s Purchasing Managers Index for July registered 57.1%, an increase of 1.8 percentage points from June's reading of 55.3%. A reading above 50% indicates expansion.
The New Orders Index registered 63.4%, an increase of 4.5 percentage points from the 58.9% reading in June, indicating growth in new orders for the 14th consecutive month. The Production Index registered 61.2%, 1.2 percentage points above the June reading of 60%. Employment grew for the 13th consecutive month, registering 58.2%, an increase of 5.4 percentage points over the June reading of 52.8 percent.
Comments from the panel were generally positive, while some indicated concern over global geopolitical situations."
Of the 18 manufacturing industries, 17 reported growth in July.