WASHINGTON — U.S. employers added 528,000 jobs last month despite warning signs of an economic downturn, easing recession fears and giving President Joe Biden some good news heading into the election. half-period.
Unemployment fell another notch, from 3.6% to 3.5%, matching the more than 50-year low reached just before the pandemic hit.
The economy has now recovered the 22 million jobs lost in March and April 2020 when COVID-19 hit the US.
The red-hot numbers reported by the Labor Department on Friday are sure to intensify the debate over whether the United States is in a recession.
“Recession, what recession?” wrote Brian Coulton, chief economist at Fitch Ratings. “The US economy is creating new jobs at an annual rate of 6 million, that’s three times faster than we normally see historically in a good year.”
Economists expected just 250,000 new jobs last month, down from a revised 398,000 in June. Instead, July turned out to be the best month since February.
The strong numbers are good news for the Biden administration and Democrats at a time when many voters are worried about the economy.
Inflation is running at its highest level in more than 40 years, and the economy has contracted for two quarters in a row, which is the common but informal definition of a recession and does not take into account a host of other factors that economists consider. , like the picture of work.
At the White House, Biden attributed job growth to his policies, even as he acknowledged the pain inflicted by inflation. He emphasized adding 642,000 manufacturing jobs during his tenure.
“Instead of workers asking employers for jobs, we are seeing employers having to compete for American workers,” the president said.
Biden has fueled job growth through his $1.9 trillion coronavirus relief package and bipartisan $1 trillion infrastructure act last year. However, Republican lawmakers and some leading economists say the administration’s spending has contributed to high inflation.
The president has received some other good economic news in recent weeks, as gasoline prices have fallen steadily after averaging just over $5 a gallon in June.
On Wall Street, stocks fell after the jobs report came out. While a strong labor market is a good thing, it also makes it more likely that the Federal Reserve will continue to raise interest rates to cool down the economy.
“The strength of the labor market in the face of … the Fed’s rate tightening already this year clearly shows that the Fed has more work to do,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Overall, today’s report should put the notion of a near-term recession on the back burner for now.”
The Labor Department also reported that hourly earnings posted a healthy 0.5% increase last month and were up 5.2% from last year. But that’s not enough to keep up with inflation, and many Americans have to skimp to pay for groceries, gas and even school supplies.
Job growth was especially strong last month in the health care industry and in hotels and restaurants.
The number of Americans who said they had a job increased by 179,000, while the number who said they were unemployed fell by 242,000. But 61,000 Americans dropped out of the labor force in July, cutting the proportion working or looking for work to 62.1% from 62.2% in June.
New Yorker Karen Smalls, 46, started looking for work three weeks ago as a support staff member for social workers.
“I didn’t realize how good the job market is right now,” he said after finishing his fifth interview this week. “You look at the news and you see all these bad reports…but the job market is amazing right now.”
A single mother, she is weighing several offers, looking for one that is close to home and pays enough to allow her to take care of her two children.
Two years ago, the pandemic brought economic life to a near standstill as businesses closed and millions of people stayed home or lost their jobs. The United States sank into a deep recession for two months.
But massive government aid, and the Federal Reserve’s decision to slash interest rates and pump money into financial markets, fueled a surprisingly quick recovery. Caught off guard by the force of the uptick, factories, stores, ports and freight yards were overwhelmed with orders and scrambled to bring back workers they laid off when COVID-19 hit.
The result has been employee and supply shortages, delayed shipments, and high inflation. In June, consumer prices rose 9.1% from a year earlier, the biggest increase since 1981.
The Fed has raised its benchmark short-term interest rate four times this year in a bid to rein in inflation, with more hikes ahead.
Labor Secretary Marty Walsh admitted that businesses and consumers are worried about inflation, but added: “Businesses continue to grow and are looking for employees. And that’s a good sign.”
In a report filled with mostly good news, the Labor Department noted that 3.9 million people worked part-time for economic reasons in July, an increase of 303,000 from June. Department economists said that reflected a rise in the number of people whose hours were cut due to a lack of business activity.
Some employers also report signs of slack in the labor market.
Aaron Sanandres, CEO and co-founder of Untuckit, an online clothing company with nearly 90 stores, noted that in recent weeks it has been a bit easier to fill positions at corporate headquarters in New York and part-time positions in stores. . .
“We’ve had a plethora of candidates,” Sanandres said. He also said the job market has loosened for engineers, likely as a result of some layoffs at tech companies.
Simona Mocuta, chief economist at State Street Global Advisors, was among those surprised by the strong hiring numbers as other indicators show the economy losing momentum.
Mocuta said hiring may have surged so much last month because candidates, seeing signs of an impending slowdown, are now more willing to take jobs they would have been denied earlier in the year. Conditions may now be “shifting in favor of employers,” she said.
Whatever the reason, the employment data released on Friday shows an astonishingly strong and resilient job market.
“Underestimate the US labor market at your peril,” said Nick Bunker, head of economic research at Indeed Hiring Lab. “Yes, output growth may be slowing and the economic outlook has some clouds on the horizon. . But employers are still itching to hire more workers. That demand may fade, but it’s still red hot right now.”
Josh Boak in Washington, Anne D’Innocenzio in New York and Courtney Bonnell in London contributed to this story.
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