US non-farm payrolls trounce expectations in July

The US created far more jobs than expected in July, with the latest monthly tally for non-farm payrolls clocking in at 255,000.

Economists had been expecting a reading of 180,000.

The NFP figures for the prior two months were revised higher by a combined 18,000.

As of 13:37 BST the yield on the benchmark two-year note were five basis points higher to 0.6902%.

By sectors, the goods-producing sector generated 16,000 positions while in services job gains ran at a 201,000 clip. The public sector payrolls fattened by 38,000.

Unemployment on the other hand, which is derived from the results of a different survey than the Establishment survey, held steady at a rate of 4.9% (consensus: 4.8%).

Average hourly earnings rose by 0.3% month-on-month to reach $25.69. In comparison with a year ago, earnings were 2.6% higher, as expected by the consensus.

The length of the average work week was at 34.5 hours, up from 34.4 in June (consensus: 34.4).

Analysts weigh in

"On the whole, this morning’s strong July employment report indicates that labor market health remains intact and, in our view, reduces near-term recession risk for the US economy. Furthermore, the print should boost FOMC members’ confidence in the outlook, especially following the unexpected weakness in Q2 GDP.

"We continue to expect the Fed to hike rates at its September meeting, and we look to Chair Yellen’s appearance at the Jackson Hole Policy Symposium on August 26 for confirmation of this view," Barclays Research´s Jesse Hurwitz said in a research report sent to clients.

For his part, Chris Williamson, chief economist at Markit said: “The steady job market improvement and keeps alive the possibility of the Fed hiking rates again this year, but worries about sluggish economic growth and deteriorating productivity, as well as uncertainty created by the presidential election, suggests that any tightening of policy will be delayed until December.

"However, like the official data, the Markit PMI has signalled robust hiring so far the year (an average monthly rise of 175,000 signalled by the surveys compares with 186,000 recorded by the official data), and consequently indicates that this year has so far seen the worst period of productivity growth recorded this side of the global financial crisis.”