July Employment Report Shows Improvement

Washington D.C

U.S. employers in July added 163,000 jobs in the month of July, according the Department of Labor, higher than the 100,000 consensus expected by Wall Street economists. The revised jobs number for June was revised downward to 64,000 from 80,000.

The U.S. economy averaged 75,000 new jobs added a month in the second quarter from April through June which is significantly lower than the 226,000 average during the first quarter of 2012.

The 163,000 new jobs created for July does show positive momentum with jobs creation, even if the gains are not enough to lower the unemployment rate.

The unemployment rate moved 8.3% in July from 8.2% in the previous month. It has been stuck above 8 percent for more than two years ( February 2009). The average work week was unchanged at 34.5 hours.   

Private payrolls, which excludes government agencies, increased 172,000 following a revised gain of 73,000.

Government payrolls decreased by 9,000 for a second month. Average hourly earnings rose by 2 cents to $23.52 in July. Manufacturing added 25,000 jobs, the highest since March. Restaurants added 29,000. Retailers added 7,000 new workers. Education and health services expanded by 38,000.

Many economists are expecting the Fed to launch a third round of bond purchases, possibly at its next policy meeting on September 12-13. But an improving jobs picture for July could make it more difficult to justify making a big adjustment in monetary policy.

Some investors were expecting to hear a poor jobs report for July. On Wednesday, the private Institute for Supply Management said manufacturing activity contracted in July for the second straight month.

Last week also revealed the  U.S. economy grew at an annual pace of 1.5 percent in the second quarter, lower than the 2.5% rate needed to keep the unemployment rate stable.

Kit Juckes, Global Head of FX Strategy at Societe Generale, told Linzie Janus on Countdown that the global economy needed a strong U.S. jobs number for the month of July. “The world badly needs after yesterday’s disappointment a really good friendly jobs number or at least one that is not terrible” Juckes said.




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