August 10, 2022
US employers add 528,000 jobs, allay recession fears

WASHINGTON (AP) – Defying concerns about a potential recession and rising inflation, US employers added an astonishing 528,000 jobs last month, restoring all the jobs lost in the coronavirus downturn. Unemployment fell to 3.5%, the lowest since the pandemic in early 2020.

Job creation in July stood at 398,000 in June and was the highest since February.

Red-hot jobs numbers from the Labor Department on Friday come 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 a recession. But most economists believe that a strong jobs market has kept the economy from slipping into recession.

The astonishingly strong jobs numbers will undoubtedly intensify the debate as to whether the US is in recession.

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

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

The Labor Department also revised the May and June recruitments, saying an additional 28,000 jobs were created in those months. Job growth was particularly strong last month in the healthcare industry and hotels and restaurants.

Hourly earnings posted a healthy growth of 0.5% last month and are up 5.2% over the previous year — still not enough to keep inflation in check.

The unemployment rate declined as the number of Americans saying they were unemployed fell by 242,000. But 61,000 Americans dropped out of the labor force in July, reducing the share of those working or looking for work to 62.1% last month, from 62.2% in June.

Strong job numbers are likely to encourage the Federal Reserve to continue raising interest rates to cool the economy and counter resurgent inflation. “The strength of the labor market clearly shows the Fed has more work to do, given the tightening from the Fed already this year,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Overall, today’s report should put on hold for the time being bearish sentiments in the near future.”

Of course, the numbers being released on Friday have political implications: Voters are worried about rising prices and the risk of a recession ahead of November’s midterm elections as President Joe Biden’s Democrats seek to retain control of Congress. Unexpectedly strong recruiting numbers would be welcome at the White House.

The economic background is troubling: GDP – the broadest measure of economic output – dropped in the first and second quarter, a fall in the continuous GDP is a definition of recession, And inflation is roaring at a 40-year high.

The resilience of the current labor market, particularly the low unemployment rate – is the biggest reason why most economists do not believe that the recession has just begun, although they increasingly fear that one is on the way.

New Yorker Karen Smalls, 46, began looking for work three weeks ago — through job sites like ZipRecruiter and Indeed — as support staff for social workers serving people with mental health issues.

“I had no idea how good the job market was right now,” she said shortly after finishing her fifth interview this week. “You watch the news and see all these bad reports… but the job market is amazing right now.” A single mother, she is weighing several offers, which is closer to her home in Manhattan and paid enough. so that she can take care of her two children.

The recession isn’t just an American problem.

In the United Kingdom, the Bank of England on Thursday estimated that the world’s fifth-largest economy slip into recession by the end of the year.

russian The war in Ukraine has deepened Perspectives across Europe. made a struggle energy supply scarce and driven prices higher. European countries are prepared for the possibility that Moscow will continue to reduce – and perhaps cut out entirely – the flow of natural gas, used to power factories, generate electricity and keep homes warm in winter.

If Europeans cannot store enough gas for the colder months, industry may need to ration.

Economies have been on a wild ride since COVID-19 hit in early 2020.

The pandemic brought economic life to a near standstill as companies shut down and consumers stayed at home. In March and April 2020, US employers cut a staggering 22 million jobs and the economy plunged into a two-month deep recession.

But massive government support – and the Fed’s decision to slash interest rates and pump money into financial markets – spurred a surprisingly quick recovery. The guards were caught by the force of the rebound, factories, shops, ports and goods yards were overwhelmed with orders And scrambled to bring back the laborers when they were hit by COVID.

The result has been shortages of workers and supplies, delayed shipments – and rising prices. in the United States, Inflation continues to rise for over a year. In June, consumer prices rose 9.1% from a year earlier – the biggest increase since 1981.

The Fed underestimated the resurgence of inflation, thinking that temporary supply chain disruptions were causing prices to rise. It has since acknowledged that the current pace of inflation is not as it was once said. moment partner,

is now the central bank respond aggressively, It has raised its benchmark short-term interest rate four times this year, with further hikes in the rates.

Higher borrowing costs are taking a toll. For example, rising mortgage rates have cooled a red-hot housing market. Sales of pre-occupied homes fell for the fifth straight month in June.

Real estate companies – including lending firm Loan Depot and online housing broker Redfin – have started laying off workers.

Ahead of Friday’s blockbuster hiring report, the labor market had shown other signs of volatility.

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 four-week average number of Americans who signed up for unemployment benefits — a proxy for layoffs that smooth out week-to-week swings — reached the highest level since November last weekHowever, the numbers may have been inflated by seasonal factors.

“Understand the US Abor market at your own risk,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Yes, production growth may slow down and there is some cloud over the economic outlook. But employers are still champing a bit to hire more workers. That demand may fade away, but it is red hot right now.

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

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