Employers in the United States Added 528,000 jobs in July, On Friday, the Labor Department said an unexpectedly strong gain shows the labor market is bearing the economic impact of higher interest rates, at least for now.
The impressive performance – which brings total employment back to its level in February 2020, before the pandemic shutdowns – provides further evidence that the US has not entered a recession.
Justin Wolfers, an economist at the University of Michigan, said the bleak readings on consumer confidence in recent months, along with fears of a recession or even the beginning of it, “completely run counter to what the fundamental data tells us.” “I’ve never seen a disconnect between the data and the overall sense of scale that I’ve seen.”
But with the Federal Reserve pursuing a strict policy of increasing interest rates to control inflation, most forecasters expect labor market momentum to slow significantly later in the year as companies cut payrolls to match lower demand.
“At this point, things are fine,” said James Knightley, chief international economist at ING Bank. “Say, December or the first part of next year, where we can see much lower numbers.”
The unemployment rate was 3.5 percent, down from 3.6 percent in June, matching a 50-year low on the eve of the epidemic.
Last week, the government reported that the state’s gross domestic product, the broadest measure of economic output, contracted for the second consecutive quarter when adjusted for inflation. The data showed a sharp decline in housing construction, a slowdown in business investment and a slowdown in consumer spending.
These trends are bound to affect the labor market in general, even if not uniformly or immediately.
Amy Glaser, vice president at global staffing agency Adecco, said her company is still struggling to fill hourly jobs, especially in retail and logistics. Employers may not have made these jobs attractive enough, and they may be increasingly laying off them.
“By the time someone steps up and the recruiter contacts them, they have about 24 hours to put them into a role or they will be gone,” Ms Glaser said. “The candidates are in the driving seat.”
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