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

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. 

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.