WASHINGTON – A sixth straight month of solid 200,000-plus job growth in July reinforced growing evidence that the U.S. economy is accelerating after five years of sluggish expansion.
Employers added 209,000 jobs last month. Though that was fewer than in the previous three months, the economy has now produced an average 244,000 jobs a month since February – the best six-month string in eight years.
At the same time, most economists think the pace of job growth isn't enough to cause the Federal Reserve to speed up its timetable for raising interest rates.
Most still think the Fed will start raising rates to ward off inflation around mid-2015.
The Labor Department's jobs report Friday pointed to an economy that has bounced back with force after a grim start to the year and is expected to sustain its strength into 2015.
Economists generally expect it to grow at a 3 percent annual rate in the second half of this year after expanding 4 percent in the second quarter. Consumer spending is rising, manufacturing is expanding rapidly, and auto sales are up.
“There is no doubt that the economy and the labor market have been strengthening,” said Sung Won Sohn, an economist at California State University's Smith School of Business. “People are rejoining the labor force. All these factors point to moderate, but sustained, economic growth in 2014.”
Speaking with reporters Friday afternoon, President Barack Obama declared that the economy “is clearly getting stronger. … Our engines are revving a little bit louder.”
In an encouraging sign, more people without jobs have started to look for one – a shift that nudged up the unemployment rate in July to 6.2 percent from 6.1 percent. Most of those who began searching last month didn't find jobs.
But the increase suggests they're more optimistic about their prospects. The jobless aren't counted as unemployed unless they're actively seeking work.
Still, Americans' paychecks are barely growing. That gives the Fed leeway to keep its benchmark interest rate near zero without worrying so much about higher inflation.
Investors were unimpressed by Friday's data. The Dow Jones industrial average fell 70 points, and broader indexes also fell. The yield on the 10-year Treasury note dipped, suggesting less concern about a Fed rate increase.
In one encouraging sign, a higher proportion of July's job gains were in higher-paying industries.
That's a shift from much of the recovery, which has been marked by outsized gains in lower-paying fields such as restaurants, retail and home health care aides.
Manufacturing added 28,000 jobs in July, the most in eight months. Construction added 22,000 and financial services 7,000, its fourth straight gain.
Accounting, bookkeeping and computer networking jobs also showed gains. And architectural and engineering jobs jumped 8,800, the most since January 2007.
“This is particularly important for new college graduates as it suggests that the market for individuals with higher education is finally firming,” said Diane Swonk, chief economist at Mesirow Financial.