August 6, 2021, | AtoZ Markets- In July 2021, the U.S. unemployment rate declined to 5.4% and added 943,000 jobs to the US economy. The American Rescue Plan Act and rising vaccination rates in many parts of the country are giving businesses the confidence they need to keep hiring.
The U.S. Bureau of Labor Statistics reported today, that employment gains were focused in the leisure and hospitality sector, local government education, and professional and business services. In addition, two key market averages that reached all-time highs were presented in the report.
In July there was a similar increase in June (+938,000). Nonfarm payroll employment in July is up by 16.7 million since April 2020
but is down by 5.7 million, or 3.7 percent, from its pre-pandemic level in February 2020.
The market took positively to see that the economic recovery is underway in the United States.
How Did the Markets React?
The market reacted positively following the U.S. Non-Farm Payrolls data.
Stocks linked to the economic recovery rose, driving the Dow Jones Index and the S&P500 to record highs again. The Dow Jones rose 135 points, setting a new intraday record.
For its part, the S&P500 rose 0.1% and reached its own intraday high. However, at the technology sector level, the Nasdaq Composite fell by 0.4%.
In July, employment showed little change in construction and wholesale trade.
Meanwhile, bank stocks led the gains following the report as rates soared, boosting their outlook for profitability. JPMorgan shares rose more than 2%, while Bank of America and Wells Fargo gained more than 3%. Industrials, retailers, and energy stocks also gained as the jobs report calmed concerns about the economic recovery.
Markets were comfortable after the release of the data.
What Happened to the Average Hours Worked?
In July, average hourly earnings for all employees on private nonfarm payrolls increased by 11 cents to $30.54.
This data following increases in the prior 3 months. Average hourly earnings for private-sector production and nonsupervisory employees also rose by 11 cents in July to $25.83.
Data from the past few months suggest that rising labor demand associated with the pandemic recovery may have put upward pressure on wages. Also, the recovery from the pandemic may have put upward pressure on wages.
However, because average hourly earnings vary widely across sectors, large fluctuations in employment since February 2020 complicate the analysis of recent trends.
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