Steadily improving U.S. jobs market supportive of Fed rate hike

WASHINGTON, (Reuters) - - U.S. employment rose at a solid clip in July and wages rebounded after a surprise stall in the prior month, signs of an improving economy that could open

the door wider to a Federal Reserve interest rate hike in September.

Nonfarm payrolls increased 215,000 last month as a pickup in construction ad manufacturing employment offset further declines in the mining sector, the Labor Department said on Friday. The unemployment rate held at a seven-year low of 5.3 percent.

Payrolls data for May and June were revised to show 14,000

more jobs created than previously reported. In addition, the

average workweek increased to 34.6 hours, the highest since

February, from 34.5 hours in June.

Though hiring has slowed from last year's robust pace, it

remains at double the rate needed to keep up with population

growth. The Fed last month upgraded its assessment of the labor

market, describing it as continuing to "improve, with solid job

gains and declining unemployment."

Average hourly earnings increased five cents, or 0.2

percent, last month after being flat in June. That put them 2.1

percent above their year-ago level, but left them well shy of

the 3.5 percent growth rate economists associate with full

employment.

Still, the gain supports views that a sharp slowdown in

compensation growth in the second quarter and consumer spending

in June were temporary. Economists polled by Reuters had

forecast nonfarm payrolls increasing 223,000 last month and the

unemployment rate holding steady at 5.3 percent.

Wage growth has been disappointingly slow. But tightening

labor market conditions and decisions by several state and local

governments to raise their minimum wage have fueled expectations

of a pickup.

In addition, a number of retailers, including Walmart

, the nation's largest private employer, Target

and TJX Cos have increased pay for hourly workers.

NEARING FULL EMPLOYMENT

The jobless rate is near the 5.0 percent to 5.2 percent

range most Fed officials think is consistent with a steady but

low level of inflation.

A broad measure of joblessness that includes people who want

to work but have given up searching and those working part-time

because they cannot find full-time employment fell to 10.4

percent, the lowest since June 2008, from 10.5 percent in June.

The labor force participation rate, or the share of

working-age Americans who are employed or at least looking for a

job, held at a more than 37-1/2-year low of 62.6 percent.

The fairly healthy employment report added to robust July

automobile sales and service industries data in suggesting the

economy continues to gather momentum after growing at a 2.3

percent annual rate in the second quarter.

Employment gains in July were concentrated in service

industries. At the same time, construction payrolls rose 6,000

thanks to a strengthening housing market, after being unchanged

in June. Factory employment increased 15,000 as some automakers

have decided to forgo a usual summer plant shutdown for

retooling. Manufacturing payrolls rose 2,000 in June.

More layoffs in the energy sector, which is grappling with

last year's sharp decline in crude oil prices, were a drag on

mining payrolls, which shed 4,000 jobs in July.

Oilfield giants Schlumberger and Halliburton

and many others in the oil and gas industry have announced

thousands of job cuts in the past few months.

(Reporting by Lucia Mutikani; Editing by Clive McKeef and Paul

Simao)

((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters

Messaging: lucia.mutikani.thomsonreuters.com@reuters.net))