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July jobs growth strong but not too strong

Mark Zandi
Adam Jeffery | CNBC

July's slower gain of 209,000 nonfarm payrolls shows the economy is chugging along, and the labor market is improving, but it is also not strong enough to push the Fed to hike rates earlier than expected.

Job creation was slightly below the 233,000 expected, and the unemployment rate rose to 6.2 percent as more workers attempted to join the workforce. The rate had been 6.1 percent and was expected to fall to 6 percent.

The big fear in markets has been that stronger data and signs of inflation mean the Fed will raise rates sooner than the second half of next year, the time frame expected by many economists. Stock futures immediately erased steep losses, the dollar tumbled and bond yields fell when the jobs report was released.

Read MoreJob creation misses expectations, unemployment rate rises