The global economy desperately needed some good news. That’s what it got in the latest U.S. jobs report.
Ahead of today’s release of the U.S. employment report for July, the mood was decidedly gloomy, with economic activity slowing in most other advanced countries, the U.K. facing a real and present danger of an economic recession and the risk of financial instability looming. Last week’s disappointing report on U.S. gross domestic product, which showed a decline in business investment threatening to drag down still-buoyant consumer spending, added to the concerns.
The U.S. job market’s performance should help dispel some of those concerns. Nonfarm employers added an estimated 255,000 jobs in July, well above consensus expectations of about 180,000. Together with upward revisions of 18,000 jobs to prior months’ estimates and June’s strong initial reading, this makes the shockingly low May reading (initially 38,000, ultimately revised to 24,000) look like even more of an anomaly.
The three-month average job gain is now running at about 190,000, suggesting that payroll growth can easily continue in the range of 120,000 to 150,000 in the months ahead — ample to compensate for natural growth in the labor force and also bring more people back into the labor force.