The broad gains in the July Employment Report from the Labor Department this morning suggests the economy continues to grow at a moderate pace. We continue to expect the economy to post faster growth in the second half of 2015 following the weak first quarter.

Despite the rebound in the jobs data and some firming of wage growth, we believe overall inflationary pressures remain benign. We expect the Fed to implement the first rate hike in the coming months, but to also tilt to the side of caution during the process of policy normalization, implementing additional rate hikes only at a very gradual pace.

Reaccelerating economic growth, benign inflationary pressures, and a cautious Fed should contribute to a favorable environment for U.S. equities over the next few quarters.

The July Employment report showed broad gains, with the economy adding 215,000 jobs for the month; 210,000 from the private sector. Prior months were also revised slightly higher.

Increases in payrolls were widespread and led by strong gains in Professional & Business Services, Education & Health Care, Leisure & Hospitality, Retailing, and Nondurable Goods Manufacturing.

Durable Goods Manufacturing and Mining and Logging were among the few industries to show job losses for the month.

The unemployment rate was unchanged at 5.3 percent.  For the month, 69,000 new entrants to the labor force were added, leaving the participation rate unchanged at 62.6 percent.

Other broader measures of unemployment and underemployment held steady or ticked down by 0.1 percentage points.

Wages rose 0.2 percent and 2.1 percent over the past twelve months.

The combination of jobs gains and higher wages pushed the aggregate weekly payrolls index, a proxy for take-home wages, up 0.6 percent for the month and 4.9 percent over the year.