Steadily improving U.S. jobs market supportive of Fed rate hike

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Markets to Expect September Rate Hike If Friday's Jobs Numbers Are Strong


U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that could open the door wider to a Federal Reserve interest rate hike in September.

Nonfarm payrolls increased 215,000 last month as a pickup in construction ad manufacturing employment offset further declines in the mining sector, the Labor Department said on Friday. The unemployment rate held at a seven-year low of 5.3 percent.

Payrolls data for May and June were revised to show 14,000 more jobs created than previously reported. In addition, the average workweek increased to 34.6 hours, the highest since February, from 34.5 hours in June.

Though hiring has slowed from last year's robust pace, it remains at double the rate needed to keep up with population growth. The Fed last month upgraded its assessment of the labor market, describing it as continuing to "improve, with solid job gains and declining unemployment."

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Steadily improving U.S. jobs market supportive of Fed rate hike
A job seeker fills out an application during a National Career Fairs job fair Wednesday, April 22, 2015, in Chicago. Weekly applications for jobless aid ticked up 1,000 to a seasonally adjusted 295,000, the Labor Department said Thursday, April 23, 2015. The four-week average, a less volatile measure, increased to 284,500. Still, that is just 2,000 higher than three weeks ago when the average was at a nearly 15-year low.(AP Photo/M. Spencer Green)
In this April 22, 2015 photo, Ralph Logan, general manager of Microtrain, left, shakes hands with a job seeker during a National Career Fairs job fair in Chicago. The U.S. Labor Department reports on the number of people who applied for unemployment benefits last week on Thursday, May 28, 2015. (AP Photo/M. Spencer Green)
Graphic shows the national unemployment rate and monthly job gains.; 2c x 4 inches; 96.3 mm x 101 mm;
Job seekers wait to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images
A representative of Virgin Hotels talks to job seekers about what type of job they're pursuing before being interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images
Job seekers wait to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images
A job seeker waits to be interviewed during a Virgin Hotels job fair in Chicago, Illinois, U.S., on Wednesday, Nov. 5, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Nov. 5. Photographer: Daniel Acker/Bloomberg via Getty Images
NEW YORK, NY - SEPTEMBER 17: People attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)
A vendor waits to set up his roadside stall in New York on October, 13, 2014. New claims for US unemployment insurance benefits fell last week to their lowest level in more than eight years, the Labor Department said. AFP PHOTO/Jewel Samad (Photo credit should read JEWEL SAMAD/AFP/Getty Images)
Job seekers fill out applications during the Eagle Ford Shale Job Fair at the American Bank Center in Corpus Christi, Texas, U.S., on Wednesday, Oct. 29, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims on Oct. 30. Photographer: Eddie Seal/Bloomberg via Getty Images
NEW YORK, NY - SEPTEMBER 17: People attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)
A job seeker arrives to speak with recruiters at the Career Choice Inland Empire Career Fair in Ontario, California, U.S., on Wednesday, Sept. 10, 2014. The U.S. Department of Labor is scheduled to release intial jobless claims figures on Sept. 11, 2014. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
NEW YORK, NY - SEPTEMBER 17: People wait in line outside to attend a jobs fair at the Bronx Public Library on September 17, 2014 in the Bronx Borough of New York City. According to the U.S. Bureau of Labor Statistics, the national unemployment rate fell to 6.2% as of June, 2014, though the Bronx borough is still suffering through 10.8% unemployment. (Photo by Andrew Burton/Getty Images)
Job seekers wait in line to speak with recruiters at the Career Choice Inland Empire Career Fair in Ontario, California, U.S., on Wednesday, Sept. 10, 2014. The U.S. Department of Labor is scheduled to release intial jobless claims figures on Sept. 11, 2014. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Kim Thy of the New York City Police Department (NYPD), right, speaks with job seeker Eric Swasey of Manhattan at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg via Getty Images
Ryan Cronauer, center, hands his resume to Tracy Malechek, left, a sous chef at Gramercy Tavern, at a career fair held by Union Square Hospitality Group at the Jazz Standard in New York, U.S., on Saturday, July 19, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on July 24. Photographer: Michael Nagle/Bloomberg via Getty Images
Job seekers line up outside at Choice Career Fairs' New York career fair at the Holiday Inn Midtown in New York, U.S., on Tuesday, May 13, 2014. The U.S. Department of Labor is scheduled to release initial and continuing jobless claims data on May 15. Photographer: Craig Warga/Bloomberg via Getty Images
A man pushes a shopping cart across a street in El Monte, California on June 19, 2014, beneath a banner announcing a free job fair. New US claims for unemployment insurance benefits fell last week, continuing to point to a downward trend in job losses, official data released today showed. The US Labor Department said initial jobless claims fell by 6,000 to 312,000 in the week ending June 14, following three straight weeks of gains. AFP PHOTO/Frederic J. BROWN (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
Applicants listen to an introductory presentation during a SkyWest Airlines Inc. flight attendant recruitment event in Chicago, Illinois, U.S., on Tuesday, Feb. 18, 2014. The U.S. Department of Labor is scheduled to release initial jobless claims figures on Feb. 20. Photographer: Daniel Acker/Bloomberg via Getty Images
Job seekers line up for the Recruit Military veteran job fair in San Diego, California, U.S., on Thursday, Feb. 27, 2014. More Americans than forecast filed applications for unemployment benefits last week, a sign the labor market is improving in fits and starts. Photographer: Sam Hodgson/Bloomberg via Getty Images
Job seekers wait to talk to recruiters and fill out applications at a job fair in New York, U.S., on Thursday, Jan. 16, 2014. Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. Photograph: Victor J. Blue/Bloomberg via Getty Images
Job seekers wait to talk to recruiters and fill out applications at a job fair in New York, U.S., on Thursday, Jan. 16, 2014. Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. Photograph: Victor J. Blue/Bloomberg via Getty Images
The minimum requirements for aide and caregiver employment are listed on a poster during the Fall Classic Hiring Spree event at Los Angeles City College in Los Angeles, U.S., on Thursday, Oct. 10, 2013. Economists and policy-makers have been trying to understand the reason for the prolonged period of high unemployment in the U.S.: a skills mismatch, weak aggregate demand, or wage rigidities. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
Job seekers meet recruiters for New York Life Insurance Co. during an employment fair hosted by Premium Job Fairs in New York, U.S., on Tuesday, Sept. 10, 2013. The U.S. Department of Labor is scheduled to release initial jobless claims on Sept. 12. Photographer: Ron Antonelli/Bloomberg via Getty Images
Job seeker Miguel Latorre reviews his resume and paperwork during a job fair in New York, U.S., on Thursday, Aug. 22, 2013. The fewest workers in more than five years applied for U.S. unemployment benefits over the past month, indicating the labor market continues to improve. Photographer: Craig Warga/Bloomberg via Getty Images
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Average hourly earnings increased five cents, or 0.2 percent, last month after being flat in June. That put them 2.1 percent above their year-ago level, but left them well shy of the 3.5 percent growth rate economists associate with full employment.

Still, the gain supports views that a sharp slowdown in compensation growth in the second quarter and consumer spending in June were temporary. Economists polled by Reuters had forecast nonfarm payrolls increasing 223,000 last month and the unemployment rate holding steady at 5.3 percent.

Wage growth has been disappointingly slow. But tightening labor market conditions and decisions by several state and local governments to raise their minimum wage have fueled expectations of a pickup.

In addition, a number of retailers, including Walmart, the nation's largest private employer, Target and TJX Cos have increased pay for hourly workers.

NEARING FULL EMPLOYMENT

The jobless rate is near the 5.0 percent to 5.2 percent range most Fed officials think is consistent with a steady but low level of inflation.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell to 10.4 percent, the lowest since June 2008, from 10.5 percent in June.

The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, held at a more than 37-1/2-year low of 62.6 percent.

The fairly healthy employment report added to robust July automobile sales and service industries data in suggesting the economy continues to gather momentum after growing at a 2.3 percent annual rate in the second quarter.

Employment gains in July were concentrated in service industries. At the same time, construction payrolls rose 6,000 thanks to a strengthening housing market, after being unchanged in June.

Factory employment increased 15,000 as some automakers have decided to forgo a usual summer plant shutdown for retooling.

Manufacturing payrolls rose 2,000 in June.

More layoffs in the energy sector, which is grappling with last year's sharp decline in crudeoil prices, were a drag on mining payrolls, which shed 4,000 jobs in July.

Oilfield giants Schlumberger and Halliburton and many others in the oil and gas industry have announced thousands of job cuts in the past few months.

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