U.S. employers added more jobs in July than forecast, illustrating rock-solid labor demand that tempers recession fears and suggests the Federal Reserve will press on with steep interest-rate hikes to thwart inflation.
Nonfarm payrolls jumped 528,000 last month, beating all estimates and the largest increase in five months, Labor Department data showed Friday. Employment in the prior month was revised up to a 398,000 gain. The unemployment rate fell to 3.5%, matching a five-decade low. Wage growth accelerated and the labor force participation rate eased.
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The median estimates in a Bloomberg survey of economists called for a 250,000 payrolls gain and for the jobless rate to hold at 3.6%. Treasury yields surged, S&P 500 index futures plunged and the dollar rose sharply.
The report suggests a steady appetite for labor in a number of industries despite growing concerns about an economic downturn. Payrolls increased in accommodation and food services, health care and professional and business services.
The July payrolls data may give Fed officials reason to continue their aggressive monetary policy approach against a backdrop of decades-high inflation. Chair Jerome Powell last week held open the possibility that officials could raise rates by 75 basis points for a third time at their next meeting in September, depending on inflation and economic data between now and then.
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