Unemployment Drops to Lowest Rate in 16 Years

Unemployment Drops to Lowest Rate in 16 Years

Unemployment Drops to Lowest Rate in 16 Years

"This was a banner jobs report", said Jed Kolko, chief economist for job search engine Indeed, based in Austin, Texas.

Nationally, the unemployment rate fell to its lowest point in almost nine years to 6.3 per cent compared with 6.5 per cent in June as the number of people looking for work dropped.

The remaining 1.1 million people marginally attached to the labor force in July had not searched for work in the past month for reasons such as school attendance or family responsibilities, according to the BLS. On the surface, that implies that the pool of people willing and available to work is low, and that short supply should put existing workers in a position to earn more pay increases. Overall, little changed in July, compared to the prior few months.

The Labor Department also announced Friday that the average hourly earnings for all employees on private payrolls rose by 9 cents, or roughly 0.3 percent, in July to $26.36.

Average wage growth in the month was 0.3 per cent, in line with analysts expectations, and keeping the annual growth rate at 2.5 per cent.

Last month, the economy added 231,000 jobs.

Before the jobs data, Jefferies economists Ward McCarthy and Thomas Simons characterized subdued wage gains as "unprecedented" at this advanced stage of the business cycle, but said they see "a more sustained cyclical acceleration going forward". The number of women of this age and older who reported having jobs rose by 14,000 from June and by 66,000 from a year earlier.

Other indicators suggest that even with the tightening job market, some slack still remains. In addition, the previous two months were revised upward by 47,000 jobs.

The U.S. labor market has been a bright spot in a long recovery marked by slow growth. The Fed has raised rates twice this year and its benchmark overnight lending rate is in a range of 1 percent to 1.25 percent. Wages continue to rise at historically low levels, which continues to be the main wrinkle in the country's labour market. The difference between those saying jobs were plentiful versus hard to get widened last month to 16.1 percentage points for the biggest gap since 2001, according to Conference Board data. Amazon this week held a series of job fairs to hire about 50,000 workers.

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