Defying fears of a possible recession and raging inflation, American employers added a staggering 528,000 jobs last month, making up for all the losses in the coronavirus recession. Employment has been restored. The unemployment rate he dropped to 3.5%, the lowest since the pandemic hit in early 2020.
Job creation in July was the highest since February, up from 398,000 in June.
The Labor Department's red-hot jobs report was released on Friday amid growing consensus that the US economy is losing momentum. The US economy contracted in her first two quarters of 2022. This is the informal definition of recession. But most economists believe a strong job market is keeping the economy from slipping into recession.
Its surprisingly strong employment numbers will no doubt intensify the debate over whether the United States is in recession. Ratings chief economist Brian Coulton writes: Faster than is usually seen historically in good years. ''
Economists expected only 250,000 new jobs this month.
The Ministry of Labor also revised its employment figures for May and June, saying an additional 28,000 jobs were created in those months. Job gains last month were particularly strong in the healthcare sector and in hotels and restaurants.
Hourly wages posted a healthy 0.5% gain last month, up 5.2% over the past year, but still not enough to keep up with inflation.
Strong employment numbers are likely to encourage the Federal Reserve (Fed) to keep raising rates to cool the economy and fight resurgent inflation.
The numbers released on Friday, of course, have political implications. As President Joe Biden's Democrats try to maintain control of Congress, voters worry about rising prices and the risk of a recession ahead of November's midterm elections. The White House will welcome an unexpectedly high number of jobs.
There was a problem in the economic background. Gross domestic product (the broadest measure of economic output) fell in both the first and second quarters. A consecutive GDP decline is one definition of a recession. And inflation is raging at his 40-year high.
The current resilience of the labor market, especially the low unemployment rate, is the main reason most economists believe the recession has not yet begun.
The recession is not just an American problem.
In the UK, the Bank of England forecast on Thursday that the world's fifth-largest economy will slip into recession by the end of the year.
Russia's war in Ukraine darkens the outlook for Europe as a whole. Conflict has led to shortages of energy supplies and rising prices. European nations are bracing for the possibility that Moscow will reduce, and possibly completely cut off, the flow of natural gas, which is used to power factories, generate electricity and heat homes in the winter.
If Europeans cannot store enough gas for the cold months, industry may need rationing.
Since her COVID-19 hit in early 2020, the economy has been out of control.
The pandemic has closed businesses, kept consumers at home, and brought economic life to a near halt. In March and April 2020, American employers cut her 22 million jobs and the economy plunged into her two months of deep recession.
However, massive government aid and the Fed's decision to cut interest rates and pump money into the financial markets facilitated a surprisingly quick recovery. Caught off guard by the strength of the rebound, factories, shops, ports and freight yards were overwhelmed with orders, rushing to reinstate workers furloughed when COVID struck.
The result is labor and material shortages, delays in shipments, and rising prices. In the United States, inflation has risen steadily for over a year. Consumer prices rose 9.1% year-on-year in June, the biggest rise since 1981.
The Federal Reserve (Fed) underestimated the recovery in inflation, believing prices were rising due to temporary supply chain bottlenecks. Since then, we have acknowledged that the current rate of inflation is not "temporary" as it was once referred to.
Currently, central banks are responding aggressively. He has raised the benchmark short-term rate four times this year, with more hikes due.
Rising borrowing costs are hurting. Rising mortgage rates, for example, have cooled a red-hot housing market. Sales of previously occupied homes fell in June for the fifth straight month.
Real estate firms, including lender loanDepot and online home broker Redfin, have begun laying off workers.
The labor market is showing signs of instability.
The Labor Department reported Tuesday that an employer posted 10.7 million jobs for him in June. That's a healthy number, but it's the lowest since September.
And her four-week average number of Americans signing up for unemployment benefits — a proxy for layoffs that smoothes out week-to-week fluctuations — rose last week to its highest level since November. Exaggerated by seasonal factors.