WASHINGTON: U.S. employment increased more than expected in July and wages picked up, which should bolster expectations of an acceleration in economic growth and raise the probability of an interest rate hike from the Federal Reserve this year.
Nonfarm payrolls increased by 255,000 jobs last month as hiring rose broadly after an upwardly revised 292,000 surge in June, the Labor Department said on Friday. The unemployment rate was unchanged at 4.9 percent as more people entered the labor market.
Highlighting labor market strength, average hourly wages increased a healthy eight cents. May payrolls were revised up to 24,000 from the previously reported 11,000.
Last month's strong job growth should reinforce the Fed's confidence in a labor market that officials view as at or near full employment. Fed Chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.
The second straight month of robust job gains is a boost to an economy after growth averaged a 1.0 percent annual rate in the last three quarters. After a policy meeting last month, the Fed described the labor market as having "strengthened" and said it appeared it was still tightening.
The U.S. central bank raised interest rates at the end of last year for the first time in nearly a decade, but has held them steady since amid concerns over persistently low inflation. Most economists expect another rate hike in December, though financial markets have almost priced out that possibility.