WASHINGTON // US employers added 215,000 jobs last month, signalling a steadily rising market and one like to nudge the Federal Reserve, the central bank, closer to raising interest rates next month.
The labour department said yesterday that the unemployment rate held at a relatively low 5.3 per cent for a second month in a row.
Monthly job growth has averaged 211,286 so far this year, indicating that employers are confident that the six-year recovery from the Great Recession will sustain strong consumer demand and require more workers.
Job growth last month roughly matched expectations, and the early reaction on the New York Stock Exchange before trading opened was muted.
The S&P 500 index slipped 0.2 per cent in early trading, and US government bond yields fell slightly after a spike.
“Another solid jobs report suggests the economy is gaining strength and keeps the Fed on track to raise rates as early as the next meeting” next month, Sal Guatieri, economist at BMO Capital Markets, said.
Hiring has remained robust even though the economy’s overall growth rate has been below par and pay raises have been modest for many workers. Average hourly earnings last month increased 2.1 per cent from a year earlier.
“It’s another solid report overall,” said Tom Porcelli, chief US economist at RBC Capital Markets in New York. “If you thought that the Fed was going to go (increase interest rates) in September, this report would suit that nicely. I think it’s another step toward the eventual lift-off.”
The Fed has held its key short-term rate near zero since late 2008, a policy introduced after the financial crisis to try to energise the economy through stronger borrowing, investing and spending. Now, more than a half-dozen years into the recovery, Fed chairwoman Janet Yellen has suggested that the economy needs higher rates.
Even as the Fed has nearly concluded that the economy is strong enough to withstand higher borrowing rates, many Americans remain anxious about a recovery defined by modest economic growth and meagre pay rises.
The economy grew at 1.5 per cent annual rate in the first half of this year – nearly half a percentage point weaker than the average of the past three years.
Lower petrol and oil prices have yet to provide the kind of boost they have in the past. A strong dollar has also weighed on economic growth. The dollar has risen about 14 per cent in value against overseas currencies in the past year.
Following the release of the latest jobs data, the Bloomberg Dollar Spot index rose 0.1 per cent to 1,215.82, reaching the highest level on a closing basis since March 13. The greenback added 0.3 per cent to US$1.0898 per euro and was little changed at 124.57 yen.
* Associated Press with Reuters and Bloomberg