US employers add 528,000 jobs, brave recession fears

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WASHINGTON (TSWT) — Defying fears of a potential recession and raging inflation, US employers added a staggering 528,000 jobs last month, restoring all the jobs lost in the coronavirus recession. Unemployment fell to 3.5%, the lowest level since the pandemic struck in early 2020.

Job creation in July was up from 398,000 in June and the most since February.

The Labor Department’s red-hot jobs data on Friday comes in amid a growing consensus that the US economy is losing momentum. The US economy shrank in the first two quarters of 2022 – an informal definition of recession. But most economists believe that the strong job market has kept the economy from going into a downturn.

The surprisingly strong job numbers will no doubt intensify the debate about whether the US is in recession or not.

“Recession – which recession?” Brian Coulton, chief economist at Fitch Ratings, wrote after the numbers were released. “The US economy is creating new jobs at an annual rate of 6 million – three times faster than what we see in a good year historically. ”

Economists had expected just 250,000 new jobs this month.

The Ministry of Labor also reviewed May and June hirings and said 28,000 additional jobs were created in those months. Job growth was particularly strong last month in the healthcare sector and at hotels and restaurants.

Hourly wages posted a healthy 0.5% gain last month and are up 5.2% over the past year – still not enough to keep up with inflation.

Strong jobs data is likely to encourage the Federal Reserve to continue raising interest rates to cool the economy and curb resurgent inflation. “The strength of the labor market in light of … the Fed’s rate-cutting 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 idea of ​​a near-term recession on the back burner.”

There are, of course, political implications in the figures released Friday: voters worry about rising prices and the risk of a recession ahead of November’s midterm elections, while President Joe Biden’s Democrats want to retain control of Congress. . The unexpectedly strong workforce will be welcomed at the White House.

The economic background is troubling: gross domestic product – the broadest measure of economic output – fell in both the first and second quarters; successive declines in GDP is one definition of a recession. And inflation is raging at its highest point in 40 years.

The resilience of the current labor market, especially low unemployment, is the main reason most economists do not believe another downturn has begun, although they increasingly fear one is imminent.

New Yorker Karen Smalls, 46, started looking for work three weeks ago — through job boards such as ZipRecruiter and Indeed — as a support staff for social workers who help people with mental health issues.

Recession is not just an American problem.

In the United Kingdom, the Bank of England forecast on Thursday that the world’s fifth largest economy would plunge into recession by the end of the year.

The Russian war in Ukraine has obscured prospects across Europe. The conflict has made energy supplies scarce and prices have risen. European countries are bracing for the possibility that Moscow will continue to reduce — and perhaps cut off — natural gas flows, which are used to power factories, generate electricity and keep homes warm in winter.

If Europeans can’t store enough gas for the cold months, the industry may demand rationing.

The economies have been on a wild ride since COVID-19 struck in early 2020.

The pandemic nearly brought economic life to a standstill as businesses closed and consumers stayed at home. In March and April 2020, US employers cut as many as 22 million jobs and plunged the economy into a deep two-month recession.

But massive government support — and the Fed’s decision to cut interest rates and pump money into financial markets — fueled a surprisingly quick recovery. Overwhelmed by the strength of the upswing, factories, shops, ports and freight yards were inundated with orders and scrambled to bring back the workers they had laid off when COVID struck.

The Fed underestimated the rebound in inflation and thought prices were rising because of temporary supply chain bottlenecks. It has since acknowledged that the current wave of inflation is not, as it was once called, “transient.”

Now the central bank is reacting aggressively. It has raised its short-term benchmark four times this year and more rate hikes are in the pipeline.

Higher borrowing costs take their toll. Rising mortgage rates, for example, have cooled a red-hot housing market. Sales of previously occupied homes fell for the fifth month in a row in June.

Real estate companies — including lender loan Depot and online home broker Redfin — have begun firing employees.

Before Friday’s blockbuster recruiting report, the job market showed other signs of shakyness.

The Labor Department reported Tuesday that employers posted 10.7 million job openings in June – a healthy number, but the lowest since September.

And the average four-week number of Americans filing for unemployment benefits — an indicator of layoffs that smooths out week-to-week swings — rose last week to its highest level since November, although the numbers may have been exaggerated due to seasonal factors.

“Underestimate the U.S. job market at its peril,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Yes, manufacturing growth could slow and the economic outlook has some clouds on the horizon. But employers are still standing eager to hire more workers. Demand may decrease, but it’s still red hot.”

Josh Boak in Washington and Courtney Bonnell in London contributed to this story.

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