Employers added 528,000 jobs in July, as the labor market continues to heat up

Suspension

Hot job market strengthened more than expected in July, as employers added 528000 jobs, a number that reflects an economy beyond recovery from the pandemic, while allaying fears that a recession may be imminent.

The Unemployment rate It fell to 3.5 percent, according to the Bureau of Labor Statistics, reaching its lowest level since February 2020, equaling the lowest rate since 1969.

The labor market has now recovered more from its pandemic losses, building confidence that an overheating labor market can continue as other parts of the economy deteriorate, providing workers with historic wage gains and more leverage in their jobs.

“It’s a solid report,” Labor Secretary Marty Walsh said. “Looking back to the day before Biden took office, 10 million people were out of work. And all those jobs have been recovered. And some other sectors have been recovered. And the buzzword we have now is ‘recession’ but we have to keep that focus on. However, what we are experiencing economically is completely different from what we have experienced in the past.”

While leisure and hospitality employment led July’s gain with 96,000 jobs added, massive picks were seen across a wide range of categories. 89,000 jobs were added for professional and commercial services, with gains in architectural and engineering services, technical consultancy, and scientific research and development. Healthcare captured 70,000 jobs, mainly in healthcare services, hospitals, and nursing facilities. Jobs in government, construction, manufacturing, and even mining also grew.

“This report is a great sign for the job market,” said Julia Pollack, labor economist at ZipRecruiter. There are many indications that inflation is declining. Gas prices are going down. Inventory levels are rising. It seems we can control inflation without stopping the labor market recovery. There is reason to believe that the labor market can weather the storm.”

The June jobs report was also revised upwards to 398,000, up from 372,000, showing continued momentum in job growth this summer.

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The July jobs report showed no sign of a slowdown, proving to be a pillar of strength for an economy facing strong winds. Other indications in particular inflation At its highest level in 40 years and Six months of negative economic growth Draw a less rosy picture. Financial markets have lost trillions of dollars in value this year, one metric Consumer confidence It hit a record low in June.

Economists worry that as the Federal Reserve continues to raise interest rates, and borrowing becomes more expensive for households and businesses, workers may have less leverage in the labor market than they did earlier this year. Also, economists fear that higher interest rates will lead to a wave of layoffs.

The Dow Jones Industrial Average fell 200 points on Friday as the stellar jobs report may give the Federal Reserve more reason to raise interest rates more sharply.

But the economy is showing signs that the labor market can remain strong and continue to recover even as the Federal Reserve raises interest rates to combat inflation.

“Today, the unemployment rate matches its lowest level in more than 50 years: 3.5 percent,” President Biden said in a statement Friday. More people are working than ever before in American history. It is the result of my economic plan to build the economy from the bottom up and in the middle.”

Wage growth, while stronger than the Fed would like to see, has not kept pace with inflation. Low-income families continue to struggle to put food on the table and pay for gas and housing. Average hourly earnings rose 0.5 percent this month, to $32.27 an hour, continuing the upward trend earlier this year.

“The most worrying thing about this report is that we haven’t seen the expected moderation in wage growth,” said Karen Dinan, a Harvard economist and former chief economist at the Treasury. To be clear, strong wage growth benefits workers in the short term. But the current pace of wage growth is not in line with low inflation in the long run.”

Declining labor force participation is another area of ​​concern for economists. In July, participation fell from 62.2 percent to 62.1 percent, raising concerns that some workers are still unable to join the workforce.

“Some of the benefits of job creation are not being felt because people are unable to get into work,” said Nick Bunker, director of economic research at Hiring Lab. “It could be lack of child care and HIV, patients from coronavirus – and the long-term effects of Covid.”

Most workers in the private sector see wage increases eroded by inflation, and a record number of Americans have achieved it Two full-time jobs. Government employees, whose wages lag behind the rest of the workforce, are suffering But more than the inflation of gas, food and housing prices.

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The number of Americans leaving their jobs remains high, albeit lower than its peak earlier this year. A record number of workers have quit their jobs over the past year, in a phenomenon known as the “Great Resignation”, as a hot labor market spurred by the pandemic has given workers increased leverage to demand higher wages and better conditions, particularly in the leisure and hospitality sectors. While the data indicate that this trend is also declining, the take-off rate remains at a Highest level in 20 years.

Elena Jeffrard, a case manager at Developmental Human Services, recently gave her notice to her employer in New York because she had found a better-paying job doing the same elsewhere with a lighter workload.

“I quit because I got sick, and they gave us more cases to take care of,” Jeffrard said. I have 40 cases I want to monitor. In my new job, I get paid more and I only have 20 cases.”

It wasn’t easy finding a new job, Jeffrard said. She applied to about 40 over the past year before she got her offer last week.

Jobs chances slow down In June compared to previous months, with notable declines in retail and wholesale trade, as consumer demand shifted away from goods towards services such as eating out, going to the movies and travelling.

The number of reported layoffs in June remained steady, although growing Media reports of job losses in the technology, advertising and healthcare sectors. In June, the information sector, which includes technology, saw a jump in the layoff rate from 0.9% to 1.3%. Netflix, MasterClass and Coinbase cut hundreds of employees in June. However, it appears that most employers are retaining their workers. In addition, workers who have lost their jobs seem to find new ones quickly.

said Erica Groshin, an economics consultant at Cornell University firm and commissioner of the Bureau of Labor Statistics 2013-2017.

Geneve Tucker, a research analyst in Kansas City, Kansas, was laid off in May by the Kansas Department of Health and Environment due to budget cuts. Tucker has since applied to nearly 200 research jobs with no luck.

“Initially I was looking for similar work, but it wasn’t an easy process,” said Tucker, who has a degree in microbiology. “At this point, I’m only trying to apply to whatever jobs my experience is relevant to that can pay an appropriate amount.”

After two months on the job, she’s now getting unemployment benefits and barely having her life. I’ve even cut back on basic groceries.

“It’s a real struggle to make ends meet at all,” Tucker said. “When gas is $5 a gallon, it’s really hard to drive to job interviews because I can’t afford the fuel. It seems very unfair to have all that experience and my degree and to get to this point where I struggle day in and day out.”

Massive job growth could provide an encouraging sign that the Federal Reserve has not gone far in calming the economy, and that it may be able to slow the economy without causing disaster for the labor market.

To control the highest rate of inflation in 40 years, the Fed has raised interest rates four times this year, including two consecutive increases of three-quarters of a percentage point. Fed leaders routinely say they will keep raising rates until they see clear and convincing evidence, through months of data, that inflation is changing. However, the danger is that they move so aggressively that companies freeze hiring or issue large-scale layoffs that drive up unemployment.

However, the latest data on gang jobs appears to have quelled those concerns, at least for the time being.

“The Fed should worry less that its actions will cause a rapid slowdown and a possible recession,” said Skanda Amarnath, executive director of Employ America, a left-leaning think tank that advocates for the Federal Reserve to allow the economy to pick up. “But in the end, it’s the inflation data for the next two versions, before the September policy meeting.”

The Fed does not make a decision to raise interest rates in August, and it is too early to know how far Fed officials will go at the next policy meeting in September. Just last week, Federal Reserve Chairman Jerome H. Powell indicated that more data will come to shape officials’ understanding of the economy.

Betsy Stephenson, an economist at the University of Michigan and a member of the Council of Economic Advisers during the Obama administration, said it would be a mistake to assume that the only way for the Fed to cool the economy was to get employers to stop. Recruit. The overall jobs report confirmed that the labor market remains exceptionally tight, Stevenson said, and raised hope that the Fed might stage a kind of “soft landing” that avoids a painful recession or high unemployment.

However, the jobs report showed more evidence of wage growth – not a sign of an economic slowdown. Economists are watching closely for any signs of what’s known as a wage-price spiral, in which higher prices drive up wages in an unsustainable cycle that leads to more persistent inflation.

“Do employers quarrel over a group of workers, and the struggle leads them to raise wages?” Stephenson said. “One of the reasons I feel optimistic is that they were able to employ 528,000 people, and that means the pool is continuing to expand… It would be worse if we saw these wage increases and we weren’t seeing job growth. It’s accurate, but it’s very important.”