Strong Job Gains, for Second Month, Reframe Economic Outlook



After months of conflicting signals and economic uncertainty, it became clear on Friday that the American jobs machine is continuing to perform at a high level.

A report from the Labor Department that said employers added 255,000 jobs in July had been eagerly anticipated on Wall Street, on Main Street and in Washington, and the much-better-than-expected showing immediately rippled through all three arenas. Stocks surged, experts expressed more confidence that the Federal Reserve was likely to raise interest rates at least once this year, and it was evident that long-stagnant wages for ordinary workers were advancing at a healthy pace.

“This was everything you could have asked for, maybe more,” said Michelle Meyer, head of United States economics at Bank of America Merrill Lynch. “We’re seeing new entrants into the labor market, which implies a longer runway for the business cycle.”

The official unemployment rate was flat at a relatively low 4.9 percent, largely because of a jump in the number of Americans looking for work and finding it.

The employment data painted an unusually strong tableau of growth, with nearly all of the indicators that form the basis of the Labor Department’s monthly jobs report pointing in the right direction.

The July increase in payrolls stands in sharp contrast to numbers released just last week showing disappointing economic growth in April, May and June. Part of the reason for the difference is that parts of the economy are still suffering from the continuing fallout from low oil prices as energy companies cut back on investment. At the same time, companies seem to prefer to to hire more workers for now rather than invest in new equipment and increase their efficiency and output.

“It’s been a really good summer for hiring all across the country,” said Tom Gimbel, chief executive of LaSalle Network, a recruiting and staffing firm based in Chicago. “Business has been great. Kids coming out of college are getting hired, and we’re seeing a lot of activity in the $50,000 to $150,000 category.”


Over the last six months, the economy has added an average of 189,000 jobs a month, Ms. Meyer said, stronger than she had expected.

In late spring, the government reported that job creation in May was much weaker than what economists had expected, but a big rebound in June similarly caught the experts off-guard. Those back-to-back, night-and-day versions of the economy’s trajectory left many experts confused, but the July data helps clear up much of that mystery.

“This is a validator,” said Michael Gapen, chief United States economist at Barclays. “This is a report that indicates that the slowdown in hiring earlier in the year has been reversed.”

June’s gain was revised upward by 5,000 jobs, and May’s by 13,000. The combination of better gains in the spring and July’s jump in hiring suggests that the Federal Reserve is likely to have a more vigorous debate about 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 is not expected to push the Fed to raise rates in September. An increase in December is more likely.

The 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.

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