US economy fuels job creation in July

WASHINGTON — US employment creation powered ahead in July with an extra 207,000 jobs added to reinforce signs of robust growth in the world's biggest economy, the government said Friday.

By (AFP)

Published: Sat 6 Aug 2005, 10:20 AM

Last updated: Thu 2 Apr 2015, 4:12 PM

The Labour Department's "non-farms payroll" figure was well ahead of Wall Street expectations for growth of 180,000 jobs in July, and was up from a revised 166,000 in June.

The department also said that the unemployment rate in July was unchanged at a four-year low of 5.0 per cent, in line with predictions. The department revised previous data to show the June jobs creation figure higher than the 146,000 given initially, and the May number up to 126,000 from 104,000 before. "Overall it is a consistently strong, solid report," Nomura economists said in a research note.

"All signs point to strong growth in the second half of 2005," they said.

The stronger-than-expected growth over a number of months in non-farms payrolls reinforced expectations that the Federal Reserve will tighten US borrowing costs further to keep a lid on inflation.

Federal Reserve chief Alan Greenspan, in testimony to Congress last month, pointed at more rate rises to come in a generally upbeat assessment of the US economy.

Greenspan, however, warned that a slowdown in labour productivity growth and record-high oil prices could cloud the picture.

The US central bank is universally expected to raise its benchmark interest rate by another quarter per centage point to 3.5 per cent when its policymaking arm meets next Tuesday.

Average hourly earnings rose by six cents, or 0.4 per cent, to 16.13 dollars in July, Friday's data showed. It was the biggest gain in hourly earnings in a year.

Hourly and weekly earnings have increased 2.7 per cent in the past year, just ahead of the 2.5 per cent inflation rate.

"The July employment report is very positive, suggesting that the labour market continued to improve," Marie-Pierre Ripert, US economist at IXIS Corporate and Investment Bank, said.

"Moreover, almost all recent indicators were particularly buoyant. In this context, we believe that the Fed will continue to tighten monetary policy at a "measured" pace," she said.

Other data have pointed to robust growth in the world's biggest economy.

Expansion in the services sector, the mainstay of the economy, slowed down a touch in July but consumer spending and personal incomes more went up strongly in June. The health of the jobs market is crucial for economic confidence, with consumer spending remaining the biggest motor of growth.

The services sector accounted for the bulk of the job creation in July.

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