The US economy added a robust 255,000 jobs in July, the Department of Labor announced on Friday, shaking off economic headwinds that had been expected to make the jobs market stumble and increasing the likelihood of an interest rate rise. The unemployment rate remained steady at 4.9%.

The positive figure comes after the labor market faltered in May, adding only 24,000 jobs. Hiring rebounded in June with a net gain of 292,000, but recent economic figures and a faltering European economy had suggested another slowdown. Economists had expected a growth of about 180,000 jobs in July and for the unemployment rate to reach 4.8%.

“US businesses have now added 15m jobs since private-sector job growth turned positive in early 2010, and the longest streak of total job growth on record continued in July,” Jason Furman, chairman of the White House’s council of economic advisers wrote in a blog post.

The job figures are being closely monitored by the Federal Reserve as it weighs another interest rate hike. The Fed raised rates for the first time since the recession last December, but has since held off amid mounting economic uncertainty in Europe following Britain’s referendum vote to leave the European Union and continuing signs of a slowdown in the Chinese economy.

Capital Economics is now forecasting a 50/50 chance of a hike around the turn of the year.

Alongside July’s strong growth both May and June’s reports were revised up. The labor department said the economy had added 18,000 more jobs over the two months than it had first calculated.



The gains were widespread. Hospitality and food, leisure, professional business services, financial activities and healthcare were the strongest sectors. The government added 38,000 jobs, a strong uptick after years of cuts. But from June to July the number of people working part-time but looking for full-time jobs increased by 100,000 from 5.84 million to 5.94 million.

Wages rose 8 cents, up from just 2 cents in June, suggesting the economy has added higher-wage jobs. Over the year, wages went up by 2.6% - highest since the start of the recovery, according to Chris Lu, the deputy secretary of labor.

“We always like to see jump in wages,” he told the Guardian, noting that the recent increase does not make up for the wage stagnation experienced by US workers over the past decade. “We need to do more on this front.”

Harry Holzer, former chief economist of the US Department of Labor, said: “The July employment report is very broadly positive. Payroll jobs rose by 255,000, after the outstanding number of 292,000 in June; the three-month average is now 190,000, which is much higher than previously anticipated.”

Economists are now divided on whether the Federal Reserve will raise interest rates before December. In July, despite its expectations that the job market would continue to strengthen, the Fed decided to leave the US interest rates unchanged for the fifth time this year.



The US central bank described the 287,000 jobs added in June as “strong” gains, but raised concerns over “soft” business investments. Cutbacks in business spending have also been blamed for the lower-than-expected growth in gross domestic product (GDP) during the three months ending on 30 June. During that time, the US economy grew at an annualized rate of 1.2%, compared to the 2.6% expected by economists.

Before Friday, it was unclear whether cutbacks in spending by businesses extended to jobs.

Earlier this week, figures released by the payroll company ADP showed that private employers added 179,000 jobs this month – about 9,000 more than expected. And while jobless claims rose by 3,000 last week to 269,000, the number has fallen 5% over the past 12 months.

“Claims remain low, albeit not quite as low as they were a couple of weeks ago, but those lower readings likely reflected seasonal adjustment issues relating to annual plant shutdowns in the auto industry,” according to Jim O’Sullivan, chief US economist at High Frequency Economics. “The data remain consistent with no major slowing in the trend in employment growth.”

Ford considers closing factories and raising prices in Europe in wake of Brexit Read more

It is not unusual for the carmakers to shut down their plants for a week or two in July due to a slowdown in demand. This year, Ford shortened the shutdown at some of its facilities even as it warned that it might consider closing its UK factories after its residents voted to leave the EU. When announcing its second quarter results this month, Ford lowered its estimates for full-year industry sales in the US and said next year’s sales will be even weaker.

The auto industry is not the only one showing signs of a slowdown. Earlier this week, oil prices dropped below $40 a barrel for the first time since April. On Thursday, a report released by outplacement firm Challenger, Gray & Christmas found that about 95,000 jobs were cut by energy firms in 2016.

Coal mining industry lost more than 13,000 jobs over the past 12 months. In Kentucky, coal jobs dropped by 6.9% from April to June. The 6,465 coal jobs remaining in Kentucky as of 1 July mark the lowest level since 1898, according to state’s officials.

Manufacturing added 9,000 new jobs this month.