The closely watched Labor Department report on Friday also showed that employers continued to raise wages at a strong clip and generally kept longer hours for workers. Firm labor market strength could give the Federal Reserve room to keep interest rates aggressively higher. “If the U.S. economy is in a recession, no one seems to have told employers,” said Sarah House, senior economist at Wells Fargo in Charlotte, North Carolina. “We suspect these data will give the Fed the confidence it needs to move aggressively in the fight against inflation.” Sign up now for FREE unlimited access to Reuters.com Register Nonfarm payrolls rose by 528,000 jobs last month, the biggest gain since February, the business survey showed. Figures for June were revised higher to show 398,000 jobs were created instead of the 372,000 previously reported. July marked the 19th consecutive month of wage growth and blew away economists’ expectations for an increase of just 250,000 jobs. Estimates in the Reuters survey of the number of jobs gained ranged from a low of 75,000 to a high of 325,000. Payroll surprise The labor market has now recovered all the jobs lost during the COVID-19 pandemic, although public employment remains about 597,000 jobs in the hole. Total employment is now 32,000 jobs higher than in February 2020. It took just under 2-1/2 years to recover all jobs compared to at least six years after the Great Recession of 2007-2009. The Fed last week raised its policy rate by three-quarters of a percentage point, and officials have vowed more hikes to come as the US central bank tries to contain inflation. Annual consumer prices are rising at the fastest rate in four decades. Since March, the Fed has raised its key overnight rate from near zero to a range of 2.25% to 2.50%. “The Fed looks increasingly likely to be able to maintain its current trajectory without constantly looking over its shoulder, which is the envy of global economies that are all enduring the same knife-edge balancing act right now,” said James Bentley. company director at Financial Markets Online. US gross domestic product fell in the first and second quarters, meeting the standard definition of a recession. The economy contracted by 1.3% in the first half of the year due mainly to wide swings in inventories and a trade deficit linked to global supply chains. The National Bureau of Economic Research, the official judge of recession in the United States, defines a recession as “a significant decline in economic activity distributed throughout the economy, lasting more than a few months, normally visible in output, employment, real income, and other indicators”. But even with the strong job gains in July, some cracks are emerging in the labor market. Businesses in the interest-sensitive housing, finance, technology and retail industries are laying off workers. But with 10.7 million jobs at the end of June and 1.8 openings for every jobless, a sharp slowdown in wage growth is unlikely this year. A pedestrian walks past a “Help Wanted” sign on the door of a hardware store in Cambridge, Massachusetts, U.S., July 8, 2022. REUTERS/Brian Snyder/ Wall Street stocks were trading lower. The dollar rallied against a basket of currencies. US bond prices fell.
WIDE PROFITS
Big job gains last month were led by the leisure and hospitality industry, which added 96,000 jobs, most of them in restaurants and bars. However, employment in the leisure and hospitality sector remains down 1.2 million from its February 2020 level. Professional and business services payrolls rose by 89,000, while the health sector added 70,000 jobs. Government employment increased by 57,000 jobs, boosted by training in local government. Construction added 32,000 jobs while manufacturing payrolls rose by 30,000. Details of the household survey from which the unemployment rate is derived were mixed. While the unemployment rate fell to a pre-pandemic low of 3.5 percent from 3.6 percent in June, that was because 63,000 people left the labor force. The labor force has now contracted for two months in a row. The labor force participation rate, or the percentage of working-age Americans who have or are looking for a job, fell to 62.1 percent from 62.2 percent in June. This mainly reflected the decline in teenage participation. Turnout The prime age population participation rate increased to 82.4% from 82.3% in June. The employment-to-population ratio for this cohort rebounded to 80%, consistent with full employment. The number of people working part-time for financial reasons rose by 303,000 to 3.9 million after plunging to a more than 20-year low in June. However, household employment rebounded by 179,000 jobs after falling 315,000 in June, and the number of people experiencing long-term unemployment fell by 269,000 to 1.1 million, the lowest level since April 2020. These long-term unemployed they represented 185.7% of the unemployed. on July. As the labor market tightened further, average hourly earnings rose 0.5% after rising 0.4% in June. That left annual wage growth at 5.2%. The working week remained unchanged at 34.6 hours. Wage gains came mainly from service industries, including leisure and hospitality, financial and professional and business services. A proxy for take-home pay rose 1.2% on a monthly basis, which bodes well for consumer spending amid falling gas prices. “The risk to wage growth appears to be on the upside in the near term, given the persistent strength of the labor market and the lack of recovery in labor supply,” said Lydia Boussour, chief U.S. economist at Oxford Economics in New York. Sign up now for FREE unlimited access to Reuters.com Register Reported by Lucia Mutikani. Edited by Chizu Nomiyama and Paul Simao Our Standards: The Thomson Reuters Trust Principles.
