The United States isn’t just continuing to add jobs — it’s strengthening as well, and that’s good for workers.
That’s the big takeaway from this morning’s monster jobs number, which blew away analysts’ expectations.
Annual wages rose at an annualized rate of 2.6 percent, which is big news in a job market that has experienced a tepid recovery when it comes to pay. But the kinds of jobs that were added were equally noteworthy. Professional and business services added 70,000 jobs to the U.S. economy; healthcare positions amounted to 43,000 more in gains, and even Wall Street — which has gained attention for slashing jobs and compensation this year — added 18,000 more roles.
“We’re seeing a gradual, but increasingly clear sign that bargaining power is beginning to grow for the worker,” said Bruce Kasman, chief global economist at JPMorgan Chase. “It’s moving slowly. We think that’s important for the economy.”
Factoring in things like solid summer consumer numbers and housing growth, it appears that the U.S. economy is improving despite a drag on corporate earnings to begin the year. That said, Kasman pointed out that he would like to see further increases in wage growth before he labels it a trend.
The humongous jobs numbers beat — of 255,000 on expectations of 180,000 jobs gained — in back-to-back months was viewed almost unanimously as a big positive for the American job market. After faltering in May, both June and July packed on triple-digit additions, buoying optimism that the U.S. economy is not faltering, but instead growing stronger.
“The job gains were broad-based,” said Deutsche Bank chief U.S. economist Joseph LaVorgna. “It’s fair to say job quality was good.”
What wage growth does not take into account are factors like bonuses and commissions, and if those also outstrip expectations, it’s a solid sign for consumers and the U.S. economy, LaVorgna said.
If the quality of jobs continues to lift wages and hours worked, it will translate into gains for consumers, and strengthen the economy further. LaVorgna noted that hours worked would translated into a boost for gross domestic product, as well.
“Overall, this is a very solid report, and one that should dispel some of the concerns that were raised by the now anomalous-looking May report,” wrote JPMorgan Chase chief U.S. economist Michael Feroli in a Friday morning analysis.