The US job market was scorching hot in July

Sun’s out, guns out.
Sun’s out, guns out.
Image: Reuters/Kai Pfaffenbach
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It’s the middle of summer, and the US economy is scorching expectations. American businesses added 255,000 jobs in July (pdf), comfortably beating analyst expectations for a gain of 180,000. It is the second consecutive report to torch forecasts, following a 292,000 gain in June (a number that was revised up from 287,000 in the original release).

May’s unexpectedly gloomy report—only 24,000 jobs were added that month—is fast fading as something to worry about. Sun’s out!

The unemployment rate remained at 4.9% in July…

… while the participation rate also held steady, at 62.8%:

The July result is particularly impressive amid concerns about the UK’s Brexit vote, a slowdown in China, weak global trade, and other economic headwinds. That said, income growth remains somewhat sluggish, with July’s 2.6% annual gain in average hourly earnings the same as in June:

The US payrolls report is one of the most watched economic releases, which investors use to gauge the financial health of the world’s largest economy and work out what the Federal Reserve might do next with interest rates. Since the US central bank hiked interest rates for the first time in a long time last December, it has sat on its hands as global economic growth sputtered.

Some Fed policymakers have suggested that the bank should raise rates again this year if the US economy gains more momentum. Today’s report strengthens their case.