U.S. job growth accelerated in July across nearly all industries, despite widespread expectations that the recession would spread as the Federal Reserve raises interest rates to fight inflation.
Employers It added 528,000 jobs On a seasonally adjusted basis, the Labor Department said Friday, that was double what forecasters had predicted. The unemployment rate fell to 3.5 percent, equaling the figure in February 2020, the lowest in 50 years.
Strong job growth is welcome news for the Biden administration in a year where fears of inflation and recession have been a recurring economic theme. “Today’s jobs report shows that we are making significant progress for working families,” President Biden announced.
The continued strength of the labor market is particularly notable with the president’s approval ratings — as gross domestic product, adjusted for inflation, has fallen for two consecutive quarters and consumer sentiment about the economy has fallen sharply.
“I’ve never seen such a big gap between the data and the public sentiment,” said University of Michigan economist Justin Wolfers, noting that employment growth is an economic north star. “When you’re trying to take the pulse of the economy as a whole, it’s worth stressing that this data is more reliable than GDP.”
But the report could complicate the Federal Reserve’s resolve to cool the economy. Wage growth increased to 5.2 percent last year, indicating that labor costs may add fuel to higher prices.
The central bank has raised interest rates four times in its battle to control steep inflation in four decades, and policymakers have signaled more increases are in store. That strategy could lead to a slowdown in hiring later in the year, as companies cut wages to adjust to expected lower demand.
Already, studies Restaurants, House builders And Manufacturers Reflected concerns that current spending would not continue. There are initial claims for unemployment insurance Penetration up toAnd Job opportunities are reduced Three consecutive months.
“At this point, things are fine,” said James Knightley, chief international economist at ING Bank. “Say, in December or early next year, we’ll see much softer numbers.”
The country lost nearly 22 million jobs at the start of the pandemic. The recovery is much faster than recoveries after previous recessions, even if employment growth is lower than expected if Covid-19 had not struck.
July’s gains were the strongest in five months and spanned nearly all corners of the economy, even as consumers shifted their spending away from goods and toward out-of-home experiences unavailable during two years of public health restrictions.
Leisure and hospitality businesses led the gains, adding 96,000 jobs, including 74,000 in bars and restaurants. The sector has been slow to recover its losses from the pandemic and is 7.1 percent below its level in February 2020.
Professional and business services, management occupations, architectural and engineering services, and research and development added 89,000 jobs. That sector, which suffered little during the pandemic, is now nearly a million jobs above where it was before the last recession.
Charlene Ferguson has been part of that boom. As director of sales and marketing for a technology services provider in Dallas, she struggled for months to hire qualified workers at affordable wages.
“People who were paying $22 an hour when we started are now asking $35 to $40 an hour,” Ms. Ferguson said. “Most of them applying for jobs didn’t finish school.”
Among his firms’ clients are accountants, manufacturers and local chambers of commerce, nervous about the direction of the economy. For now, he’s trying to hold onto the queue and invest in automation software to catch up with his workers.
“No matter what business you’re in, now is not the time to lay off your staff and not do your regular marketing,” Ms Ferguson said.
The only one Broad industry Losing jobs in July was auto manufacturing, which lost about 2,200 jobs. The public sector added 57,000 workers, especially teachers.
In critical industries such as technology, if some employers begin layoffs, those workers will be absorbed by companies that want to hire but can’t find people. And for many types of businesses, an even broader slowdown in orders could be enough to boost wages in the fall.
For example, mortgage rates are rising and new Housing begins And Permissions As fall begins, residential construction is expected to slow. Nevertheless, the construction sector added 32,000 jobs in July.
“In industries where we typically see an early slowdown — construction, manufacturing, automotive — there’s been a backlash because of supply chain issues,” said Amy Glaser, senior vice president of business operations at global staffing firm Adecco. “That also helps us get through this time, because it takes months to catch up.”
Paradoxically, fear of the fallout drives even more people to take jobs while they still exist, and stay put instead of leaving. Number of unemployed 27 weeks or more fell to 1.1 million in July, while the share of people They quit their jobs has been stable or falling since February. There are small businesses reported While hiring remains a major concern, labor availability has improved slightly in recent months.
“Workers have had a lot of choice over the past year in deciding which of the many offers to choose,” said Simona Moguda, chief economist at State Street Global Advisors. “If the consumer sentiment polls are really right and there’s a sense that things are starting to change, you might have an incentive to make your choice and do it.”
However, in a significant asterisk for the report’s broader strength, higher demand has done little to expand the ranks of available workers by bringing people out of the labor market.
The overall labor force participation rate fell 1.3 percentage points below its level in February 2020 to 62.1 percent. Policymakers watched those numbers closely.
In particular, large numbers of over-55s are not looking for work, bank accounts that swelled during the pandemic have been depleted and the falling stock market has taken away a chunk of 401(k) accounts, raising fears of insufficient retirement savings. .
Some of it, evidence Recommends, may be due to the increasing number of debilitating long-term Covid-19 cases. John Lear, chief economist at polling and analytics firm Morning Consult, said surveys show contagion concerns persist — but there may not be enough awareness of the opportunities available.
“I think it’s a reflection of information asymmetry,” Mr. Lear said. “We know there are a lot of offers out there, but if you’re sitting on the sidelines, it’s really hard to know that your skills, maybe in a restaurant, could be transferred very quickly and turned into transportation or warehousing.”
Maine resident Jessica Buckley has been one of those considering a new career, but the state’s rate of Job opportunities is higher than the national average.
She worked in agricultural marketing until a decade ago when she decided to stay home with her children. When she started looking for a job again, nothing comparable was available in the area and she was reluctant to change fields while the family was earning with her husband’s income.
Increasingly, however, he’s willing to take on a law or work in restaurants, where wages have risen 18.6 percent — not adjusted for inflation — since the pandemic began.
“Everything is on the table,” said Ms Buckley, 52. “I’ll either start bartending, or go back to being a waitress.
Ben Casselman Contributed report.
