Strong Employment Report in U.S. Helps Economic Outlook

Employment in the U.S. rose by more than had been expected for the second consecutive month during July while wages also ticked up, bolstering the expectations of economic growth being faster than thought.

The reports also raised the probability that the Federal Reserve would increase interest rates again before the end of the year.

Nonfarm payrolls added 255,000 new jobs following a June report of 292,000 new jobs that had been revised upward, with the hiring spread out across the different sectors of the U.S. economy, said the Labor Department on Friday.

Another 18,000 jobs were added to the previous reports for both May and June.

Economists were expecting payrolls to add over 180,000 jobs for July and that the unemployment rate would drop to 4.8% from 4.9%.

The rate of unemployment did not change remaining at its June rate of 4.9%, as more individuals enter the labor market.

The average earnings for hourly pay increased during July by 8 cents and are up more than 2.6% compared to the same month last year. Workers also worked more hours during July.

The U.S. dollar rallied versus a number of currencies following the release of the new data, while U.S. government debt yields were up as well.

The signs of strength in the labor market, particularly the increase in wage growth, might become one important factor in the presidential election this November, given the voter frustrations with the growth or lack of in the economy that has left behind many from the country.

On Monday, Donald Trump the presidential nominee for the Republicans will explain his economic vision Monday during a speech.

The strong jobs market from last month should help to reinforce the confidence of the Fed in the labor market, which officials look at as or near complete, full employment.

Janet Yellen the Fed Chair has said the U.S. economy must create just less than 100,000 new jobs each month to maintain the population growth.

The central bank in the U.S. raised the interest rate for just the first time in December of last year, but has since held the rate steady amidst worries over the persistently low inflation in the U.S. and a growth slowdown in the global economy.

Given the global uncertainties that conduct to linger, and the upcoming presidential election in the U.S., most economists are expecting another increase of interest rates by the Feds in December.

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David Glass

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