The American economy roared ahead last month, as employers added 255,000 jobs, a bigger-than-expected gain that suggests the country’s growth rate may be more robust than thought just two months ago.
The Labor Department report for July had been eagerly anticipated on Wall Street, in Washington and on the campaign trail after conflicting signals in recent months about the economy’s trajectory.
Hiring in May was much weaker than what economists had expected, while a big rebound in June similarly caught the experts off-guard. July’s data suggests an economy that is gaining momentum after a spring slowdown.
“This will be a validator,” said Michael Gapen, chief United States economist at Barclays, in an interview before the release of the data. “Another solid gain in July would suggest that May’s numbers were an aberration.”
The unemployment rate was flat at 4.9 percent. Economists had been expecting a gain of about 180,000 jobs, with a fall in the unemployment rate to 4.8 percent.
June’s gain was revised upward by 5,000 jobs, and May by 13,000. The combination of better gains in the spring and July’s jump in hiring suggest that the Federal Reserve may take a fresh look at raising interest rates when it meets in September.
The Fed said in July, after the most recent meeting of its policy-making committee, that the economy was growing more strongly and there were fewer clouds on the horizon, suggesting it was giving greater consideration to rate increases later this year.
The strength of job growth in July is likely to reinforce that assessment. But it still may not be sufficient for the Fed to raise rates in September.
The July jobs data is certain to reverberate not only for policy makers at the Fed, but also for Hillary Clinton and Donald J. Trump as November’s presidential election draws closer.
Tepid data released last week for second-quarter growth offered an opening for Republicans to question Democratic arguments that the recovery was delivering meaningful gains for most Americans.
Although the Labor Department will release three more months’ worth of monthly hiring data before voters go to the polls on Nov. 8, the buoyant picture presented for July comes at a moment in the campaign when polls are in flux.
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What Should You Take Away From the Jobs Report?
The Times’s Tom Redburn and Patricia Cohen broke down what was bigger-than-expected hiring data from last month.
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Indeed, there was ammunition for both candidates in Friday’s report.
The labor force participation rate ticked up by 0.1 percentage point, compared with 62.7 percent in June.
Although that is an improvement from late last year, the proportion of Americans who are working remains close to lows last seen in the late 1970s. That only underscores how many workers remain on the economic sidelines as the recovery enters its eighth year.
On the other hand, wages are showing signs of life, with average hourly earnings rising 0.3 percent in July, bringing the 12-month gain to 2.6 percent. As the unemployment rate has fallen, some employers have been forced to raise salaries to retain their best workers and attract new ones.
What’s more, increases in the minimum wage in many states recently, plus increases in the lowest-tier salaries by big employers like Walmart, Target and Aetna, are beginning to ripple through the broader work force.
On Monday, Minnesota raised its minimum wage by 50 cents, requiring large employers to pay workers $9.50 an hour while smaller firms must pay at least $7.75. On July 1, similar increases went into effect in Maryland, Oregon and the District of Columbia.
Still, a two-tier job market has emerged in many ways across the United States, with workers in the same region facing radically different conditions
