September 24, 2022

Image credit: BBC

US jobs growth jumps in July despite slowdown fears

In July, US firms created more than 500,000 new jobs, and the unemployment rate fell, dispelling concerns that the labour market is about to slow down.

As more people were hired by restaurants, bars, and other businesses, the unemployment rate dropped from 3.6 percent in June to 3.5 percent.

After recent data suggested that the US economy was still contracting, the Labor Department’s report came in much stronger than anticipated.

To control rising costs, the US central bank is hiking interest rates.

Spending and economic activity are decreased by higher borrowing costs. However, senior US economic authorities have expressed optimism that the US labour market will continue to be robust enough to let the Federal Reserve raise rates without causing a recession.

The former head of the bank and current secretary of the Treasury, Janet Yellen, declared last week that the economy was moving from a roaring post-pandemic rebound to a more stable and steady era of development.

However, worries about a prolonged downturn have grown as consumer confidence declines, the housing market weakens, and some businesses announce job cuts or postpone hiring plans.

The Labor Department reported that the US has fully recovered all 22 million jobs that were lost when the epidemic struck in 2020. Additionally, the unemployment rate has decreased to 50-year lows and is back to its pre-pandemic level.

The unemployment rate for Hispanic and Latino workers fell to 3.9 percent in July, the lowest level since records began in 1973.

According to analysts, the Federal Reserve is likely to continue rapidly raising interest rates as a result of strong hiring.

In response to consumer prices rising at their quickest rate since 1981, the bank has already announced rate increases four times since March. In June, inflation rose again, reaching 9.1 percent.

Pay increases as well, though not as quickly. According to the study released on Friday, hourly wages on average increased by 5.2% in July 2021.

The jobs data was “uncomfortably hot,” said to economist Jason Furman, who counselled former president Barack Obama and is currently a Harvard professor.