Economy adds 187,000 jobs in July, a sign the Fed's rate hikes are working

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U.S. employers added 187,000 jobs during the month of July, less than the 200,000 economists were expecting and below the 209,000 created in June. 

The unemployment rate dipped to 3.5%, and average hourly earnings rose 4.4% annually. 

Sectors adding jobs included health care (63,000), social services (24,000), financial activities (19,000) and hospitality (17,000). Jobs cuts were seen in manufacturing and employment services at 2,000 and 8,000, respectively. 

Health care: +63,000

Social Services: +24,000

Financial activities: +19,000

Hospitality: +17,000

Manufacturing: -2,000

Employment services: -8,000

Source: Bureau of Labor Statistics 

Last month, the unanimous decision by the Federal Reserve to raise interest rates put the key benchmark federal funds rate at a range of 5.25% to 5.5%, the highest since 2001, further restricting economic activity as the borrowing costs for homes, cars and other items march higher.

It marks the 11th rate increase aimed at combating high inflation since policymakers began tightening in March 2022. 

FED HIKES RATE TO 22-YEAR HIGH

Following the Fed's last meeting, Chairman Jerome Powell said policymakers will continue to monitor data points to assess another rate hike this year. 

«Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate,» he said during a press conference. 

Currently, 81% of market participants expect the Fed to keep rates as is at the next meeting, according to the CME's Fed Watch Tool. 

Federal Reserve Chair Jerome Powell speaks during