Job growth still over 200k in July

Six-month string of steady progress is called encouraging

By

Published:

 

WASHINGTON — A sixth straight month of solid 200,000-plus job growth in July reinforced evidence that the U.S. economy is accelerating after five years of sluggish expansion.

Employers added 209,000 jobs last month, averaging 244,000 jobs a month since February — the best six-month string in eight years.

Americans' paychecks, though, are barely growing. That helps give the Fed leeway to keep its benchmark short-term rate near zero without worrying so much about higher inflation.

Investors were unimpressed by Friday's data. The Dow Jones industrial average fell 69 points, and broader indexes also dropped. The yield on the 10-year Treasury note dipped, suggesting less concern about a Fed rate increase.

Encouragingly, a higher proportion of July's job gains were in higher-paying industries. That's a shift from much of the recovery, which has been marked by outsized gains in lower-paying fields such as restaurants, retail and home health care aides.

Manufacturing added 28,000 jobs in July, the most in eight months. Construction added 22,000 and financial services 7,000, its fourth straight gain. Accounting, bookkeeping and computer networking jobs also showed gains. And architectural and engineering jobs jumped 8,800, the most since January 2007.

"The market for individuals with higher education is finally firming," said Diane Swonk, chief economist at Mesirow Financial.

Job growth is pushing up wages in some sectors. But the increases haven't been widespread.

Ted Toth, vice president of Rosenberger North America in Pennsauken, N.J., which makes parts for satellite, radar and GPS systems, says he has four openings that offer from $20 to $32 an hour. But he hasn't been able to find employees qualified to fill them.

His company raised wages 6 percent this year to fend off competitors' efforts to poach its employees.

"Everybody's stealing from each other," he said.

As hiring has increased and more people began seeking work, the proportion of working-age adults who either have a job or are looking for one rose slightly in July from a 36-year low to 62.9 percent. It was the first increase in four months.

The number of unemployed rose 197,000 to 9.7 million. Nearly three-fourths of that increase represented people who resumed job hunts after previously giving up. The number of people who were unemployed because they had been laid off actually declined in July.

The lack of significant pay increases for most Americans has been a factor hobbling the recovery. Higher pay is needed to fuel consumer spending, which makes up nearly 70 percent of economic activity.

In July, average hourly earnings ticked up a penny, to $24.45. That was 2 percent more than 12 months earlier and below inflation of 2.1 percent. In a healthy economy, wages before inflation would rise 3.5 to 4 percent annually.

Pay has failed to accelerate in part because many Americans are still uncertain about the economy's long-term health, said Mike Schenk, a senior economist at the Credit Union National Association.

Schenk expects wages to pick up once the unemployment rate falls to around 5.5 percent — a level at which some businesses will have to increase pay to keep workers and some employees will be more confident asking for a raise. "People are still bruised," he said. "I don't think they feel comfortable, generally speaking, walking in and asking for raises at this point."