U.S. Job Growth Accelerated in July, Unemployment Rate Falls

U.S. job growth accelerated in July by the most in almost a year and the unemployment rate declined, illustrating additional momentum for the labor market still grappling with hiring challenges.

Payrolls climbed by 943,000 last month after an upwardly revised 938,000 increase in June, a Labor Department report showed Friday. The median estimate in a Bloomberg survey of economists called for a 870,000 gain. The unemployment rate dropped to 5.4%.

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Government payrolls added 240,000 jobs to the headline figure. Private payrolls posted a steady gain.

A resurgence in economic activity has sparked a surge in labor demand — particularly in the leisure and hospitality industry — since the beginning of the year. At the same time, payrolls remain well short of pre-pandemic levels and many employers have struggled to fill a record number of vacant positions.

The figures mark another step toward the Federal Reserve’s goal of “substantial” further progress in the labor market recovery. Fed officials including Chair Jerome Powell and Governor Lael Brainard have indicated the labor-market recovery had some way to go before the central bank could begin tapering asset purchases.

Fed Governor Christopher Waller said this week that if the next two monthly employment reports show continued gains, he could back such a move.