US employers add 164,000 jobs in July, wages pick up

Washington

US EMPLOYERS kept adding workers at a healthy pace in July and wage gains picked up, underlining a solid labour market ahead of this week's Federal Reserve interest-rate cut and President Donald Trump's threat to ratchet up tariffs on Chinese goods.

Payrolls rose 164,000, almost matching projections, though the two prior months were revised lower, according to a Labor Department report Friday. The jobless rate held at 3.7 per cent, near a half-century low, while average hourly earnings climbed 3.2 per cent from a year earlier, better than forecast.

Despite July's healthy payrolls figure, the three-month average increase of 140,000 was the slowest in almost two years. That trend is in line with forecasts for a gradual slowing of job gains as the labour market tightens, but it could also be seen as a sign that the economy is losing steam.

Investors boosted bets on additional reductions after Mr Trump's latest trade salvo on Thursday. The Federal Reserve had signalled a day earlier that its quarter-point interest-rate cut would likely start only a short round of monetary easing, though Chairman Jerome Powell indicated that the central bank was watching trade developments closely.

Traders of fed funds futures maintained the amount of easing they expect from the US central bank this year on Friday. The 10-year Treasury yield held its decline for the session and was around 1.86 per cent, while the dollar was little changed on the day.

Revisions subtracted 41,000 jobs from the prior two months. The June figure was lowered from 224,000 to a less-eye-popping 193,000.

The job gains were led by service providers, particularly in education and health services, as well as professional and business services. Retail payrolls fell for a six month, while manufacturing added the most in six months. Construction gains were relatively weak, at 4,000.

Average hourly earnings rose 0.3 per cent from the prior month, above estimates, following an upwardly revised 0.3 per cent gain. That indicates wages are gaining momentum as employers encounter greater difficulty finding workers, and also bodes well for resilient consumer spending in the face of tariffs.

The participation rate, or share of working-age people in the labor force, increased to 63 per cent as the count of both employed and unemployed Americans increased in the household survey.

At the same time, the average workweek got shorter, boosting average hourly pay. The average for all private employees decreased to 34.3 hours, from 34.4 hours, as manufacturing hours touched their lowest point since November 2011.

The underemployment rate, fell to 7 per cent, the lowest since 2000, from 7.2 per cent; the gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.

Private employment rose by 148,000 after increasing 179,000; government payrolls rose by 16,000.

There was no indication that hiring of temporary census workers had a significant effect on payrolls. Economists surveyed by Bloomberg had projected 165,000 new jobs with unemployment at 3.6 per cent and annual wage gains at 3.1 per cent. BLOOMBERG