Strong U.S. employment report brightens economic outlook

Fri Aug 5, 2016 5:09pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth, and raising the probability of a Federal Reserve interest rate increase this year.

Nonfarm payrolls rose by 255,000 jobs after an upwardly revised 292,000 surge in June, with hiring broadly based across the sectors of the economy, the Labor Department said on Friday. In addition, 18,000 more jobs were created in May and June than previously reported.

Economists polled by Reuters had forecast payrolls increasing 180,000 in July and the unemployment rate dipping one-tenth of a percentage point to 4.8 percent.

The unemployment rate was unchanged at 4.9 percent as more people entered the labor market.

Highlighting job market strength, average hourly earnings increased a healthy eight cents and are up 2.6 percent year on year, while workers put in more hours.

"The July jobs report was everything you could have asked for and more. Provided the strength in jobs is confirmed with other economic data, the Fed will have sufficient reason to hike (rates) this year," said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York.

The U.S dollar .DXY rallied against major currencies after the data, while yields rose on U.S. government debt as traders ramped up bets for an eventual Fed interest rate rise.

U.S. stocks notched their best day in a month on Friday, with the S&P 500 .SPX and Nasdaq .IXIC indexes both closing at record highs. [.N]   Continued...

People enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York October 7, 2014. U.S. job openings rose to their highest level in more than 13 years in August even as hiring fell, the U.S. Department of Labor said. REUTERS/Shannon Stapleton (UNITED STATES - Tags: BUSINESS EMPLOYMENT) - RTR49AUA