US employers added 528,000 jobs; Unemployment drops to 3.5%

Washington — Defying concerns about a possible recession and rising inflation, US employers added an astonishing 528,000 jobs last month, restoring all the jobs they had lost last month. coronavirus recession. Unemployment fell to 3.5%, the lowest since the pandemic in early 2020.

Job creation in July was 130,000 more than the jobs produced in June, and was the highest since February.

Red-hot jobs numbers from the Labor Department on Friday come amid a growing consensus that the US economy is losing momentum. The US economy shrank in the first two quarters of 2022 – an informal definition of a recession. But most economists believe that a strong jobs market has kept the economy from slipping into recession.

Friday’s surprisingly strong report will undoubtedly intensify the debate as to whether the US is in recession.

“Recession – what recession?” Brian Colton, chief economist at Fitch Ratings, wrote after the numbers came out. “The US economy is creating new jobs at an annual rate of 6 million – three times faster than what we typically see historically in a good year.”

Economists had expected only 250,000 new jobs this month.

Of course, Friday’s jobs numbers have political implications: Americans have become increasingly concerned about rising prices and the risk of a recession. It will certainly be at the fore of voters’ minds during November’s midterm elections as President Joe Biden’s Democrats seek to retain control of Congress.

On Friday, Biden took credit for the resilient labor market, saying, “It’s a result of my economic plan.”

The president has boosted job growth last year through his $1.9 coronavirus relief package and $1 billion bipartisan infrastructure legislation. However, Republican lawmakers and some prominent economists point to government spending as the cause of current inflation levels not seen in 40 years.

And for millions of Americans, it’s the fading power of paychecks in the midst of rising inflation that remains front and center.

Hourly earnings posted a healthy growth of 0.5% last month and are up 5.2% over the prior year. That’s not enough to keep up with inflation, which means that many Americans, especially the poorest, are facing higher prices for groceries, gasoline and even school supplies.

“There’s more work to do, but today’s jobs report shows we’re making significant progress for working families,” Biden said on Friday.

The Labor Department also revised the May and June recruitments, saying an additional 28,000 jobs were created in those months. Job growth was particularly strong last month in the healthcare industry and hotels and restaurants.

The unemployment rate declined as the number of Americans saying they were unemployed fell by 242,000. But 61,000 Americans dropped out of the labor force in July, reducing the share of those working or looking for work to 62.1% last month, from 62.2% in June.

While a strong job market is a good thing, it is also more likely that the Federal Reserve will continue to raise interest rates to cool the economy.

“The labor market strength from the Fed already this year clearly shows the Fed has more work to do,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Overall, today’s report should put on hold for the time being bearish sentiments in the near future.”

On Wall Street, SThe &P 500 was down 0.1% after wiping out almost all of the earlier losses of over 1%. It appears that investors are weighing the positives of a strong job market against the possibility that the Fed will continue to raise rates aggressively to calm the economy and inflation.

Attempts are being made to interpret the widely differing economic data on both Wall Street and Main Street.

New Yorker Karen Smalls, 46, began looking for work as a support staff for social workers three weeks ago.

“I had no idea how good the job market was right now,” she said shortly after finishing her fifth interview this week. “You watch the news and see all these bad reports… but the job market is amazing right now.” A single mother, she is weighing several offers, which is closer to her home in Manhattan and paid enough. so that she can take care of her two children.

This is a far cry from the situation two years ago when the pandemic nearly brought economic life to a halt as companies shut down and millions remained at home. In March and April 2020, US employers cut a staggering 22 million jobs and the economy plunged into a two-month deep recession.

But massive government support – and the Fed’s decision to slash interest rates and pump money into financial markets – fueled a surprisingly quick recovery. Caught by the force of the rebound, factories, shops, ports and cargo yards were overwhelmed with orders and scrambled to bring back workers when COVID-19 hit.

The result has been shortages of workers and supplies, delayed shipments – and rising prices. In the United States, inflation has been rising steadily for more than a year. In June, consumer prices rose 9.1% from a year earlier – the biggest increase since 1981.

The Fed underestimated the resurgence of inflation, thinking that temporary supply chain disruptions were causing prices to rise. It has since been accepted that the current state of inflation is not, as it was once called, “transient”.

Now the central bank is responding aggressively. It has raised its benchmark short-term interest rate four times this year, with further hikes in the rates.

In a report filled with mostly good news, the Labor Department noted that 3.9 million people were working part-time in July for economic reasons, up from 303,000 in June. According to labor economists, “reflects an increase in the number of people whose hours were cut because of sluggish work in business conditions.”

Some employers are also showing signs of a slowdown in the job market.

Aaron Sanandres, CEO and co-founder, an online clothing company with nearly 90 stores, has noticed that it has become a little easier to fill jobs in part-time roles at corporate headquarters and stores in New York over the past few weeks. For example, Sanandres noted that his company was able to hire two people into e-commerce in less than a month. In the past, this took more than twice as long.

“We have a lot of candidates,” Sanandres said. He also said that as a result of some layoffs in technology companies, the labor market for engineers is loosening up. Untit, like many retailers, has lost a good portion of hourly workers to gig jobs that offer more flexibility. Sanandres said the company is still fighting that competition, but it’s getting easier.

The Labor Department reported Tuesday that employers posted 10.7 million job openings in June — a healthy number but the lowest since September.

Employment figures released on Friday reflect a surprisingly strong job market in the US, even with some tightening in the labor market in some regions.

“Understand the US labor market at your own risk,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Yes, production growth may slow down and there is some cloud over the economic outlook. But employers are still champing a bit to hire more workers. That demand may fade away, but it is red hot right now.

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Josh Bock in Washington, Anne D’Innocenzio in New York and Courtney Bonnell in London contributed to this story.

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