After another month of solid job increases in July and a heartening uptick in wages, something else is more likely to rise by the fall: interest rates.
New data from the Labor Department on Friday pave the way for the Federal Reserve to raise its benchmark interest rate for the first time since 2006, economists said.
"The job creation to date is sufficient to give them the green light," said Chris Rupkey, chief financial economist at Union Bank in New York, who put odds at about 70% that the Fed raises the rate at its September meeting.
The economy added 215,000 net new jobs last month, led by hiring from retailers and healthcare providers.
The unemployment rate held steady at a seven-year low of 5.3%. And in a hopeful sign for consumers, average hourly earnings increased by 5 cents to $ 24.99 after declining by a penny in June.
"The evidence overall is clear that the labor market has improved dramatically in recent years," said Andrew Chamberlain, chief economist at Glassdoor, an online job search and recruiting website.
Job creation was down from June’s upwardly revised figure of 231,000. But the July figure was in line with analysts’ expectations and was the 15th time in the 17 months that the labor market expanded by more than 200,000 net new jobs.
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Such "a boring report can be a good jobs report" because it shows the economy is back on track after the Great Recession, Chamberlain said.
But advocates for workers said there still are too many unemployed Americans and wage growth is too slow to warrant an interest rate increase any time soon.
Still, investors appeared worried that a rate hike, which would start to increase business borrowing costs, is coming after the Fed’s September meeting. The Dow Jones industrial average dropped 46.37 points, or 0.3%, to close at 17,373.38.
The so-called federal funds rate has been near zero since late 2008 as central bank officials tried to stimulate economic growth during and after the Great Recession by making it cheaper to spend and borrow than save. The rate applies to short-term lending between banks but has become a benchmark for consumer and business loans.