215K Jobs Added In July, Unemployment Rate Steady at 5.3%

The numbers aren't spectacular but they're solid enough to keep a September rate hike in play. Non-farm payrolls rose just about as expected, up 215,000 in July with upward revisions adding 14,000 to the prior two months. The unemployment rate is unchanged at 5.3 percent. Wages show some traction, up 0.2 percent in the month with the year-on-year rate over 2 percent at 2.1 percent. The average workweek is up, rising to 34.6 hours from a long run at 34.5. The labor force participation rate, which dropped sharply in June, held at 62.6 percent.

Other details look surprisingly solid with payrolls rising 60,000 in trade & transportation, for a third straight strong gain, and professional & business services rising 40,000 to extend their long healthy run. Retailers continue to add jobs, up 36,000 for their third straight strong gain with the motor vehicle subset up 13,000 and reflecting the strength of car sales. Manufacturing, which is usually weak, rose a notable 15,000 in the month with construction, where lack of skilled labor is being reported, showing a modest gain of 6,000.

Another plus in the report is a decline in Janet Yellen's favorite reading, the broadly defined U-6 unemployment rate which is down a notch to 10.4 percent. If the August employment report a month from now looks this good, a rate hike at the September FOMC will be a lock.

Recent History Of This Indicator:
The employment situation report has not been strong but has been strong enough to keep up expectations for a rate hike later this year. The Econoday consensus for July non-farm payroll growth is 212,000 vs 223,000 in June and compared against the second-quarter average of 221,000. The unemployment rate, which ratcheted 2 tenths lower in June on a striking decline in the labor force, is expected to hold steady at 5.3 percent. Average hourly earnings, which came to a sudden standstill in June, are expected to rebound a moderate 0.2 percent and will be watched with extra attention for inflation clues on Fed policy.