U.S. employers continued their trend of adding workers, as the Labor Department reported the economy added 164,000 jobs in July and the unemployment rate held at 3.7%.
The Labor Department also reported that average hourly earnings exceeded expectations, rising 3.2% year-over-year.
Bloomberg reported that despite continued growth, the three-month average increase of 140,000 was the slowest in almost two years, which is line with forecasts for a gradual slowing of job gains.
In response to the report, Doug Duncan, Fannie Mae’s Chief Economist, said the jobs report came in close to expectations with an economy that is “gradually slowing” as the economic expansion lengthens. He also expressed optimism in the unemployment rate as 370,000 households were added to the labor force in July.
“This good news represents the largest gain to the labor force this year as households continue to return from the sidelines,” Duncan said.
Realtor.com’s Chief Economist Danielle Hale said the July report didn’t factor in the Fed’s decision to cut interest rates,  and it could make it more challenging to justify another cut later this year.
“The 164,000 jobs added in July are a strong signal that the economy continues to grow and could make some Fed decision-makers less inclined toward rate cuts in the short-run, especially as the unemployment rate still hovers near 50-year lows at 3.7%,” Hale said.
Hale added the month’s earning’s growth of 3.2% helps homebuyer purchasing power, especially with low mortgage rates. The housing industry, though, still faces issues with affordability and the “excess of demand” for supply of lower price points.
Odeta Kushi, First American Financial Corporation’s Deputy Chief Economist, said the record low mortgage rates of 3.8% and rising wages helped increase homebuyer power over the prior month. She anticipates more of the same in the months ahead.
“Further decreases in mortgage rates could be on the way. Combined with the strength of the labor market, potential home buyers may see their house-buying power continue to grow in the months ahead," Kushi said.