The Department of Labor reports that American payroll jobs increased by 207,000 in July. This gain follows a June increase of 166,000. Both these figures are preliminary data. Employment gains hit a low in May 2003 but total nearly 4 million since that time as reported by the Bureau of Labor Statistics. The unemployment rate for July also remained steady at 5 percent. It has not been this low since September 2001.
“This is a crystal clear indication that the labor markets are very healthy and it reinforces the notion that the economy is growing in a healthy, sustainable way,” said Dana Johnson speaking with Yahoo! News. Johnson is the chief economist at Comerica in Detroit.
Sectors seeing the most growth were construction, financial activities, health care, and retailing while factory employment have seen dropping numbers for both June and July mostly affected by auto manufacturing plants temporarily shutting down for retooling.
“Once skittish businesses are turning into confident businesses that are willing and able to hire,” said economist Mark Zandi speaking with Yahoo! News. I think the job market will improve further in the course of the coming year.” Zandi is the chief economist for Economy.com.
Average hourly earnings for production workers increased by $.06 to $16.13 for July. Average weekly earnings increased $2.02 over June’s earnings of $541.56. While these increases are good for workers, economists and investors are seeing shadows of inflation in these numbers.
The Federal Reserve reported a jump of $14.51 billion in U.S. consumer credit for June. This measure included closed-end lending and credit card use. It is the largest increase in eight months.
“The economy has transformed to another phase, a phase where the combination of sustained economic growth along with stronger business confidence will produce a steady creation of 200,000 positions per month,” Ken Mayland, president of ClearView Economics, said speaking with Yahoo! News.
The Federal Reserve is expected to increase the overnight lending rate as it has done in its last nine meetings. An increase of another quarter point would bring the rate to 3.5 percent. With wages rising at the rates seen over June and July, moving the overnight rate up by a half-point may be in order. The Fed meets again on Tuesday to reevaluate its credit tightening campaign.
“What needs to be watched is the wage situation,” said Joel Naroff of Naroff Economic Advisors speaking with Yahoo! News. “Was the jump in wages a one-shot wonder or does it portend accelerating labor costs? That is an unknown right now.”