Implications: The job market continued to expand in July and looks poised for further healing in August. Nonfarm payrolls grew 1.763 million in July, making for a combined gain of roughly 9.3 million in the past three months, a recovery of about 42% of the payroll drop that happened in March and April. The improvement was confirmed by civilian employment, an alternative measure of jobs that includes small-business start-ups, which rose 1.35 million in July and has rebounded a total of 10.1 million in the past three months versus losses of 25.3 million in March and April. Restaurants & bars had the largest payroll gain in July and have now recovered more than half of the job losses in March and April. Another piece of relatively good news is that the unemployment rate, which the consensus expected to come in at 10.6%, arrived at 10.2%, instead. That's still very high by historical standards, but much lower than the peak of 14.7% in April. However, part of the improvement in the unemployment rate was because the labor force (people working or looking for work) declined 62,000, following large gains in May and June. Perhaps the best news in today's report was that average hourly earnings and the total number of hours worked both rose in July, with earnings up 0.2% and hours up 1.0%. Recently, these two figures have moved in opposite directions. At first, layoffs of lower paid workers meant earnings for the remaining workforce were rising even though total hours fell. Then, as hours rebounded and lower-paid workers were rehired it made average earnings decline. Now they're rising in tandem. Multiplying hours by earnings shows that total earnings rose 1.2% in July. That said, total earnings are still down 3.1% versus a year ago, which means workers have less purchasing power generated by actual production, versus purchasing power coming from government benefits. In other recent news, initial jobless claims fell 249,000 last week to 1.186 million. That's still very high, but the lowest level since March. Continuing claims for regular benefits fell 844,000 to 16.1 million, also very high, but the lowest since April. These figures suggest that the labor market is continuing to heal, and jobs gains will continue in August. A full recovery is still a long way off, but there should be no doubt the recovery has started.
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