U.S. job growth climbed in July, as unemployment and labor force participation declined, putting new pressure on wages and inflation.

According to the labor market report released Friday by the Bureau of Labor Statistics (BLS), the economy added 528,000 jobs in July. Job growth was broad, led by the service sectors, like leisure and hospitality, professional and business services, and health care.

The picking up of job growth coincided with the continued decline in labor force participation, from 62.2% in June to 62.1% in July. That's well below the pre-pandemic level of 63.5%, confirming the drying up of the pool of Americans available for work.

Robust job growth, combined with lower labor force participation, helped create a tight labor market with the unemployment rate — the percentage of the labor force that doesn't have a job and is actively looking for one — dropping to 3.5% in July from 3.6% in June, near a multiyear low.

That's undoubtedly a good thing for Main Street, as it puts more money into the hands of working people and eventually more money into the overall economy. Meanwhile, it gives the Federal Reserve more room to raise interest rates without risking an outright recession aggressively.

"July payrolls surprised to the upside, reminding investors of how tight the labor market remains," Phillip Neuhart, Director of Market and Economic Research at First Citizens Bank Wealth Management, told International Business Times in an email. "The strong jobs market gives the Fed the latitude to tighten monetary policy aggressively and, at the same time, contributes to the need for tighter monetary policy."

But that may not necessarily be good news for Wall Street, which has been rallying recently on hopes that the Fed is very close to ending its tightening policy.

"If there was hope that the Fed was cooling things off, we might have to wait a little longer, and rate hikes may continue longer and a bit more aggressively than many had hoped they would," Jay Woods, Chief Market Strategist at DriveWealth, told IBT in an email. "This puts next week's CPI number back into focus. If we see a hot number there (expectations of 8.7%), then cries for a 75 basis-point hike for the September meeting will grow much louder."

Callie Cox, U.S. Investment Analyst at eToro, thinks the strong July jobs report could be good for Wall Street in the long run.

"One detail in the data that jumped out to me is the fact that – pending any revisions – the economy has now recovered all of the 22 million jobs that were lost in the 2020 recession," Cox told IBT in an email. "Regardless of your views on recession or inflation, that is something to cheer about. Even if the market sees this report as too hot, the strength we've seen in the job market could be building a strong economic base for the years ahead – the opposite of what we saw after the Great Financial Crisis."