Monthly change in jobs
Data is seasonally adjusted.
Source: Bureau of Labor Statistics
By Ella Koeze
By Lydia DePillis
U.S. job growth accelerated in July across nearly all industries, restoring nationwide employment to its prepandemic level, despite widespread expectations of a slowdown as the Federal Reserve raises interest rates to fight inflation.
Employers added 528,000 jobs on a seasonally adjusted basis, the Labor Department said on Friday, more than doubling what forecasters had projected. The unemployment rate ticked down to 3.5 percent, equaling the figure in February 2020, which was a 50-year low.
The robust job growth is welcome news for the Biden administration in a year when red-hot inflation and fears of recession have been recurring economic themes. “Today’s jobs report shows we are making significant progress for working families,” President Biden declared.
The labor market’s continued strength is all the more striking as gross domestic product, adjusted for inflation, has declined for two consecutive quarters and as consumer sentiment about the economy has fallen sharply — along with the president’s approval ratings.
“I’ve never seen a disjunction between the data and the general vibe quite as large as I saw,” said Justin Wolfers, a University of Michigan economist, noting that employment growth is an economic North Star. “It is worth emphasizing that when you try to take the pulse of the overall economy, these data are much more reliable than G.D.P.”
But the report could stiffen the Federal Reserve’s resolve to cool the economy. Wage growth sped up, to 5.2 percent over the past year, indicating that labor costs could add fuel to higher prices.
The Fed has raised interest rates four times in its battle to curb the steepest inflation in four decades, and policymakers have signaled that more increases are in store. That strategy is likely to lead to a slowdown in hiring later in the year as companies cut payrolls to match expected lower demand.
Already, surveys of restaurateurs, home builders and manufacturers have reflected concern that current spending will not continue. Initial claims for unemployment insurance have been creeping up, and job openings have fallen for three consecutive months.
“At this stage, things are OK,” said James Knightley, the chief international economist at the bank ING. “Say, December or the early part of next year, that’s where we could see much softer numbers.”
Payrolls have fully recovered the jobs lost in the pandemic.
Cumulative change in jobs since before the pandemic
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