Washington - US employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that opened the door wider to a Federal Reserve interest rate increase in September.
Nonfarm payrolls increased 215 000 last month as a pickup in construction and manufacturing jobs offset further declines in the mining sector, the Labour Department said on Friday. The unemployment rate held at a seven-year low of 5.3%.
Payrolls data for May and June were revised to show 14 000 more jobs created than previously reported. In addition, the average workweek increased to 34.6 hours, the most since February, from 34.5 hours in June.
"We view this report as easily clearing the hurdle needed to keep the Fed on track for a September rate hike. The bar for not moving now is much higher," said Rob Martin, an economist at Barclays in New York.
The Fed last month upgraded its assessment of the labor market, describing it as continuing to "improve, with solid job gains and declining unemployment."
The US central bank said its policy-setting committee anticipated it would be appropriate to raise lending rates when it has seen "some further improvement" in the jobs market. It has not raised rates since 2006.
US stocks fell after the jobs data as traders saw a greater chance of a rate hike next month. The dollar rose to near a four-month high against a basket of currencies before weakening. Prices for longer-dated US Treasuries were up.
Though hiring has slowed from last year's robust pace - mostly because of job losses in the energy sector - it remains at double the rate needed to keep up with population growth.
Average hourly earnings increased five cents, or 0.2%, last month after being flat in June. That put them 2.1% above the year-ago level, but well shy of the 3.5% growth rate economists associate with full employment.
Still, the gain supported views that a sharp slowdown in compensation growth in the second quarter and consumer spending in June were temporary. The aggregate weekly payrolls index, a proxy for take-home wages, rose 0.6% in July and was up 4.9% from a year ago.
Economists had forecast nonfarm payrolls increasing 223 000 last month and wages rising 0.2%.
Wage growth has been disappointingly slow. But tightening labor market conditions and decisions by several state and local governments to raise their minimum wage have fueled expectations of a pickup.
In addition, a number of retailers, including Walmart , the nation's largest private employer, Target and TJX Cos have increased pay for hourly workers.
The jobless rate is near the 5.0% to 5.2% range most Fed officials think is consistent with a steady but low level of inflation.
A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell one-tenth of a percentage point to a seven-year low of 10.4% in July.
The short-term unemployment rate slipped to 3.8% from 3.9% in June, while the jobless rate for the long-term unemployed held steady at 1.4%.
But the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, held at a more than 37-1/2-year low of 62.6%.
The fairly healthy employment report added to robust July automobile sales and service industries data in suggesting the economy continues to gather momentum after growing at a 2.3% annual rate in the second quarter.
Last month's increase in the workweek together with the solid payrolls gain lifted the index of total hours worked by 0.5 percent, the largest rise since October. The hours worked index is seen as a proxy for gross domestic product.
"We think this represents another solid employment report that meets the criteria for 'some further improvement' in the labor market and keeps the Fed in play for September," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.
Employment gains in July were broad-based, with the share of industries adding jobs hitting a seven-month high. Construction payrolls rose 6,000 thanks to a strengthening housing market, after being unchanged in June.
Factory payrolls increased 15 000 after rising 2 000 in June. The retail sector added 35 900 jobs.
Professional and business services payrolls gained 40 000 after increasing 69 000 in June. The slowdown reflected a drop of 8 900 in temporary employment, which was the weakest reading since September 2012.
More layoffs in the energy sector, which is grappling with last year's sharp decline in crude oil prices, were a drag on mining payrolls, which shed 4 000 jobs in July. The mining sector has lost 78 000 jobs since December.
Oilfield giants Schlumberger and Halliburton and many others in the oil and gas industry have announced thousands of job cuts in the past few months.