Job creation crushed estimates in July as the economy added 255,000 positions, according to the Labor Department.
The headline unemployment rate held steady at 4.9 percent, though a more encompassing measure that includes those not actively looking for work and those working part-time for economic reasons moved up a notch to 9.7 percent. Though still mired near generational lows, the labor force participation rate ticked up one-tenth to 62.8 percent as those counted as not in the labor force decreased 184,000 to 94.3 million.
Hourly wages also moved higher, increasing by 8 cents or an annualized pace of 2.6 percent, while the average work week edged up to 34.5 hours.
Economists had been looking for an increase of 180,000 and a decline of the unemployment rate to 4.8 percent.
“This was another strong report that checked most, if not all of the significant boxes,” said Curt Long, chief economist at the National Association of Federal Credit Unions. “The labor market should remain strong as long as consumers maintain their robust spending pace.”
Professional and business services led the way with 70,000 new positions, while health care rose 43,000 and Wall Street jobs increased by 18,000. Leisure and hospitality continued to be a big contributor to job growth, adding 45,000. Government added 38,000 to the total.
Job losses came in mining and logging (-7,000), while construction added 14,000 and manufacturing grew by 9,000.
Jobs were evenly distributed, with full-time positions growing by 306,000 and part-time adding 150,000.
“As well as being a long way above the consensus forecast of a 180,000 gain, the strength of July’s employment report was unusually broad-based,” said Paul Ashworth, chief U.S. economist at Capital Economics.
Previous months’ tallies also gained due to revisions. May’s anemic 11,000 gain got bumped up to 24,000 while the strong June number moved from 287,000 to 292,000.
The report came as recent indicators have raised fresh concerns about the pace of growth. Gross domestic product gains averaged just 1 percent in the first half of the year. However, there’s hope that the second half will be better. The Atlanta Fed is projecting GDP to increase 3.7 percent in the third quarter.
“Firms have finally put it in their head that we’re going to have steady growth despite the GDP numbers,” said Bill Spriggs, chief economist at the AFL-CIO. “Firms are finally labor-hoarding. They think the economy is going to grow at about a 1 to 2 percent rate, and they’re hiring in anticipation of that continuing.”
Traders pushed stock market futures higher on the strong report and increased the chance for the Federal Reserve to hike interest rates. The probability for a September move rose from 12 percent to 18 percent while a hike before the end of the year moved from 34.4 percent to 46.5 percent.
Jobless rates fell across multiple demographic groups, with teenagers falling from 16 percent to 15.4 percent and Hispanics dropping from 5.8 percent to 5.4 percent. The unemployment rate for Asians increased three-tenths to 3.8 percent.