The labor market's strength trumped higher interest rates and elevated inflation as the number of jobs increased in July.
The Bureau of Labor Statistics said the US economy added 528,000 jobs. The economists expected a gain of 255,000 jobs. Labor demand held steady through the summer as job growth rebounded from the previous month.
The increase was revised to 398,000 payrolls. The May count was revised to 386,000, up from 384,000.
Employment levels are higher than they were before the outbreak of the Pandemic hit. Changes to the economy and how Americans work will likely have a lasting effect on the labor market's makeup, even though several sectors have yet to fully rebound.
According to the report, the unemployment rate has fallen. The median economist forecast was 3.6% and it came in below that.
John Leer said that if you thought the economy was in a recession, you were wrong. The economic outlook for the third quarter is starting to look better.
There was an increase of 96,000 jobs in the leisure andhospitality industry. 74,000 new jobs were created in restaurants and bars. Employment in the sector is down 1.2 million payrolls from pre-crisis levels, but the past several months suggest that businesses will add jobs at a faster rate.
There was a 89,000-payroll gain. The government and health care firms created tens of thousands of jobs.
The clothing and accessories stores lost 5,200 jobs. The majority of sectors posted gains through the month.
There was a months-long trend of moderately slowing job growth. The pace of hiring has been fast as companies' healthy demand for workers overshadowed hurdles like the Federal Reserve's rate hikes. The job openings data for Junesuggested that labor demand could be slowing down, but with overall openings still above 10 million and nearly doubling the number of available workers, the economy will likely keep adding payrolls through the near term.
Measures included in the report were positive. In July, the average hourly earnings increased by 1% to $32.27. Americans are feeling the weight of high inflation. Most workers are stuck with negative real wage growth because of the inflation problem. Workers are still winning historically large pay gains despite the July gain.
The trend of labor force participation was not in the right direction. The rate, which shows the percentage of Americans who are either working or looking for work, fell for the second straight year. It will take a healthy rally in participation for labor supply to balance out with companies' massive demand because of the tight labor market.
The economic environment is getting harder. The Fed raised rates by 0.75 percentage points in late July and pushed the federal funds rate to a range of 2% to 2.5%. The range is seen by the Fed as neutral, meaning it doesn't affect the economy. The low borrowing costs of the past two years are gone.
The strong July figures left the door open for the Fed to continue raising rates. The labor market has been targeted by the central bank as an area where it can cool demand. Wages and payrolls show the Fed will keep pushing rates higher in hopes of balancing out the labor market
Seema Shah, chief global strategist at Principal Global Investors, said that the labour market is tight and wage growth is strong. The Fed needs to create enough slack to help ease price pressures.
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