2021.08.0613:33:00UTC+00U.S. Job Growth Exceeds Estimates In July, Unemployment Rate Drops To Pandemic-Era Low

A closely watched report released by the Labor Department on Friday showed U.S. employment soared by more than expected in the month of July.

The Labor Department said non-farm payroll employment spiked by 943,000 jobs in July after surging by an upwardly revised 938,000 jobs in June.

Economists had expected employment to jump by 870,000 jobs compared to the addition of 850,000 jobs originally reported for the previous month.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the data "indicates that employment growth has shifted into a higher gear and that the drag on hiring from labor shortages is easing."

"That suggests economic growth may be holding up better than we had feared and leaves open the possibility of Fed Chair Jerome Powell dropping a stronger hint that tapering is on the way at Jackson Hole in three weeks' time," Hunter added.

The stronger than expected job growth was partly due to sharp increases in employment in leisure and hospitality and local government education, which shot up by 380,000 jobs and 221,000 jobs, respectively.

Reflecting the strong job growth, the unemployment rate slid to 5.4 percent in July from 5.9 percent in June, falling to its lowest level since March of 2020. Economists had expected the unemployment rate to dip to 5.7 percent.

The bigger than expected decrease in the unemployment rate came as household employment skyrocketed by 1.043 million persons, while the labor force rose by 261,000 persons.

The report also said average hourly employee earnings rose by $0.11 or 0.4 percent to $30.54 in July. Annual wage growth accelerated to 4.0 percent in July from 3.7 percent in June.