‘What Recession?’: US employers add 528,000 jobs in July

WASHINGTON – U.S. employers added a staggering 528,000 jobs last month, despite warning signs of an economic downturn, easing recession fears, and delivering good news to President Joe Biden ahead of the mid-term elections.

Unemployment fell another notch, from 3.6% to 3.5%, equaling the more than 50-year low reached just before the pandemic took hold.

The economy has now made up for all 22 million jobs lost in March and April 2020 when COVID-19 hit the United States

The red-hot numbers reported on Friday by the Department of Labor are sure to intensify the debate over whether the United States is in a recession.

“Recession – what recession?” Wrote Brian Coulton, chief economist at Fitch Ratings. “The US economy is creating new jobs at an annual rate of 6 million, three times faster than what we normally see in a good year.”

Economists had only expected 250,000 new jobs last month, down from the revised 398,000 in June. Instead, July turned out to be the best month since February.

The strong numbers are good news for the Biden administration and Democrats at a time when many voters are worried about the economy.

Inflation rages at the highest level in 40 years and the economy has contracted for two consecutive quarters, which is the common, but informal, definition of a recession and does not take into account a number of other factors considered by economists, such as the image of work.

In the White House, Biden attributed the growth in employment to his policies, although he acknowledged the pain inflation inflicted. She pointed out the addition of 642,000 manufacturing jobs during her he watch.

“Instead of asking employers for work, we are seeing employers have to compete for American workers,” the president said.

Biden boosted job growth through its $ 1.9 trillion coronavirus aid package and $ 1 trillion bipartisan infrastructure bill last year. Republican lawmakers and some prominent economists, however, say administration spending contributed to high inflation.

The president has received more good economic news in recent weeks as gasoline prices have steadily fallen after averaging just over $ 5 a gallon in June.

On Wall Street, stocks fell following the release of the employment report. While a strong job market is a good thing, it also makes it more likely that the Federal Reserve will continue to raise interest rates to cool the economy.

“The strength of the labor market in the face of … Fed rate tightening 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 overshadow the idea of ​​a short-term recession.”

The Department of Labor also reported that hourly earnings recorded a healthy 0.5% increase last month and increased 5.2% over the past year. But that’s not enough to keep up with inflation, and many Americans have to skimp to pay for groceries, gasoline, and even school supplies.

Employment growth was particularly strong last month in the healthcare sector and in hotels and restaurants.

The number of Americans claiming to have a job increased by 179,000, while the number of unemployed fell by 242,000. But 61,000 Americans dropped out of the workforce in July, reducing the share of those working or looking for work to 62.1% from 62.2% in June.

New Yorker Karen Smalls, 46, started looking for work three weeks ago as a member of the social worker support staff.

“I didn’t realize how good the job market is right now,” she said after finishing her fifth interview this week. “You watch the news and you see all these bad reports … but the job market is great right now.”

A single mother, she is weighing various offers, looking for one that is close to home and pays enough for her to take care of her two children.

Two years ago, the pandemic brought economic life to a standstill when businesses closed and millions of people stayed home or were kicked out of work. The United States has plunged into a deep recession that lasted two months.

But massive government aid – and the Fed’s decision to cut interest rates and pour money into financial markets – fueled a surprisingly rapid recovery. Caught off guard by the force of the rebound, factories, shops, ports and freight yards were overwhelmed with orders and rushed to bring back the workers they fired when COVID-19 struck.

The result was a shortage of employees and supplies, delayed shipments and high inflation. In June, consumer prices rose 9.1% from the previous year, the largest increase since 1981.

The Fed has raised its benchmark short-term interest rate four times this year in an effort to tame inflation, with further hikes in sight.

Labor Secretary Marty Walsh admitted that businesses and consumers are worried about inflation, but added, “Businesses continue to grow and are looking for employees. And that’s a good sign. ”

In a report full of good news, the Department of Labor noted that 3.9 million people worked part-time for economic reasons in July, an increase of 303,000 from June. Economists in the department said this reflects an increase in the number of people whose hours have been reduced due to a lack of activity.

Some employers also report signs of a slowdown in the labor market.

Aaron Sanandres, CEO and co-founder of Untuckit, an online clothing company with nearly 90 stores, has noted that in recent weeks it has been a little easier to do jobs at the corporate headquarters in New York and part-time roles in stores. .

“We had a plethora of candidates,” Sanandres said. He also said the job market has eased for engineers, possibly due to some layoffs at tech companies.

Simona Mocuta, chief economist at State Street Global Advisors, was among those stunned by the sheer number of hires when other indicators show an economy losing momentum.

Mocuta said it’s possible hiring increased so dramatically last month because job applicants, seeing signs of an impending slowdown, are now more willing to take jobs that they would have turned down earlier in the year. Conditions could now “change in favor of employers,” she said.

Whatever the reason, the employment data released on Friday shows a surprisingly strong and resilient labor market.

“Underestimate the US job market at your own risk,” said Nick Bunker, head of economic research at Indeed Hiring Lab. “Yes, production growth may slow and the economic outlook has some clouds on the horizon. But employers are still trying to hire more workers. That request may vanish, but it’s still hot right now. ”

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Josh Boak in Washington, Anne D’Innocenzio in New York and Courtney Bonnell in London contributed to this story.

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