July Jobs Report Shows Solid 1.8 Million Gain: Hospitality, Government, Retail Hiring Boost Headline Total

Headline unemployment fell to 10.2% last month, the Bureau of Labor Statistics said Friday, after the economy added a better-than-expected 1.8 million new jobs despite pandemic-triggered business closures.

The U.S. economy added a better-than-expected 1.8 million jobs last month, the Bureau of Labor Statistics said Friday, pulling the headline unemployment rate to 10.2%. But the pace of hiring slowed from the previous month amid a surge in coronavirus infections and new business closures.

The BLS said payrolls increased by 1.763 million, well ahead of the Street consensus forecast of 1.58 million but sharply slower than the 4.791 million confirmed for the month of June. The gains clipped the headline unemployment rate to 10.2%, down from 11.1% in June. Average hourly earnings, the BLS said, rose 0.2% from last month to $29.32.

"The economy is proving more resilient than many people thought -- the jump in payrolls of 1.76 million (and higher than the 1.48 million expected) is showing more strength in the job market, which should be good news for equities and other risk assets, said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. 

"Much of the rally that we’ve seen so far has been fueled by Federal government stimulus and Federal Reserve liquidity, but for it to continue, the economy needs to continue to heal and the data this morning is adding credence to the idea that things are continuing to improve," he added.

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Investors had been concerned that a weaker reading of private sector job creation, published by payroll processing firm ADP on Wednesday, as well as the 21st consecutive week of 1 million-plus people filing for unemployment benefits for the week ending July 25 would signal a softer July reading, but hiring by the U.S. government, which added 301,000 new jobs, improved the headline reading. 

The retail sector added 258,300 new jobs, the BLS said, and construction added around 20,000. Leisure and hospitality added 598,000 new jobs, the BLS said, while the Labor Force Participation rate slipped to 61.4%.

U.S. equity futures pared declines following the stronger-than-expected reading, with contracts tied to the Dow Jones Industrial Average indicating a modest 90 decline and those linked to the S&P 500 suggesting an 11 point dip for the broader benchmark.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.21% higher on the session at 93.007, down from 93.205 prior to the BLS release, while benchmark 10-year U.S. Treasury note yields were little-changed at 0.54%