Jobs growth likely produced solid gains in July

July’s jobs numbers are out Friday morning with the expectation that employers created more than 200,000 positions for the sixth straight month.

Forecasts are ranging from between 205,000 and 235,000, which would reflect a steadily improving labor market that still has some battles to wage despite its solid streak of growth.

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Mark Zandi, chief economist with Moody’s Analytics, said he is expecting an increase of 210,000 in July, which would come in below June's  initial estimate of 288,000 jobs.

"The job market is strong and getting stronger," Zandi said.

"The economy is on track to create nearly 3 million jobs this year. This about as good as it gets. The last time job growth was as strong was in the technology boom of the late 1990s."

An ADP report on Wednesday showed that private-sector employers added 218,000 jobs in July, the fourth straight month of gains eclipsing 200,000.

While the gains were strong, they fell below the 281,000 jobs created in June.

Whether it helps improve President Obama's approval ratings and Democrats election hopes this fall remains to be seen.

So far, Democrats haven't gotten much of boost out of the gradually improving economy with foreign policy dominating the political landscape.

While some economists are forecasting that the unemployment rate will remain at 6.1 percent — the lowest level since September 2008 — Zandi thinks it will fall to 6 percent.

As the labor market improves, Zandi argued that real wage growth, after inflation, is the "only missing ingredient to a healthy job market."  

"Wage growth has been stuck near 2 percent, the rate of inflation, throughout most of the economic recovery," he said.

"Given the still considerable amount of slack in the job market, wage growth is unlikely to pick up significantly until this time next year when more of that slack is absorbed."

Wage growth is a big concern of the AFL-CIO, too.

"There are still far too few jobs and too little wage growth for the vast majority of Americans who work for a living, rather than live off stocks and bonds," said Jeff Hauser, who leads the AFL-CIO's political outreach, in a blog post on Thursday. 

"With full employment far off and inflation low, it is clear we need all policy makers, from Congress and the White House to governors and the Federal Reserve, to prioritize continued economic growth and job creation," he aid.

Zandi expects that hourly earnings will  tick up 0.2 percent in July and show a 2.2 percent increase on a year-over-year basis. 

He expects that a technical factor in the July data will likely show a bigger decline in government jobs because the school year ended later than normal in many parts of the country due to the bad winter weather.  The shift caused June’s government employment gain to be overly strong, which will get zapped in July.

With continued slack in the job market — concerns about the ability of part-time workers to move into full-time jobs and the drop off in labor force participation — it should take until late 2016 before the economy reaches full employment.

That would be nearly 10 years after the recession hit in December 2007. 

In its latest policy statement, the Federal Reserve on Wednesday said that while the labor market has continued to improve, there still "remains significant underutilization of labor resources."

A separate Commerce Department report on Wednesday showed the economy grew at a healthy 4 percent annual pace in the April-June quarter.

David Crowe, chief economist with the National Association of Home Builders, said the housing sector’s continued recovery is dependent on jobs growth.

The sector saw a nice jump in growth in second quarter gross domestic product figures released on Wednesday, but Crowe estimates that much of the rebound made up for two straight dismal quarters.

Meanwhile, the quality of the job growth is steadily improving and with gains accelerating across all pay scales and part-time employment falling as more full-time jobs become available, Zandi said..

Zandi surmised that the job market could really start cranking next year as the labor market tightens and employers compete for skilled workers.

“While it would be a big plus for the economy and job market if lawmakers could come to terms on corporate tax reform, immigration reform, and more infrastructure spending, it is not a necessary condition for stronger growth in the next several years,” Zandi said.  

“Longer-term, these policies are critical to stronger growth."