U.S. job growth accelerated in July across nearly all industries, restoring employment nationwide to its pre-pandemic level, despite widespread expectations of a slowdown as the Federal Reserve raise interest rates to fight inflation.
Entrepreneurs it added 528,000 jobs on a seasonally adjusted basis, the Labor Department said Friday, more than double what forecasters had projected. The unemployment rate fell to 3.5 percent, matching the February 2020 figure, which was a 50-year low.
The strong job growth is welcome news for the Biden administration in a year in which high inflation and recession fears have been recurring economic themes. “Today’s jobs report shows that we are making significant progress for working families,” President Biden said.
The continued strength of the labor market is all the more surprising as inflation-adjusted gross domestic product has declined for two straight quarters and consumer sentiment about the economy has fallen sharply, along with approval ratings. of the president
“I’ve never seen a disjuncture between the data and the overall mood as big as I saw,” said Justin Wolfers, an economist at the University of Michigan, noting that job growth is an economic pole star. “It’s worth stressing that when trying to take the pulse of the economy as a whole, this data is much more reliable than GDP”
But the report could harden the Federal Reserve’s resolve to cool the economy. Wage growth accelerated 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 strongest inflation in four decades, and policymakers have signaled more increases are on the way. This strategy is likely to lead to a slowdown in hiring at the end of the year as companies cut payrolls to accommodate the expected lower demand.
Yes, polls from restaurateurs, home builders i manufacturers have reflected their concern that current spending will not continue. Initial applications for unemployment insurance have been crawlingand job offers have fallen for three consecutive months.
“At this stage, things are looking good,” said James Knightley, chief international economist at ING Bank. “Let’s say December or early next year, that’s where we could see much softer numbers.”
+32,000 jobs since February 2020
+22 million jobs since April 2020
152.5 million jobs in February 2020
The nation lost nearly 22 million jobs at the start of the pandemic. The recovery has been much faster than in the aftermath of previous recessions, although employment remains lower than would have been expected had Covid-19 not hit.
July’s gains were the strongest in five months and spread across nearly every corner of the economy, even as consumers have been shifting their spending away from goods and toward out-of-home experiences not available for 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 the slowest to recover its losses from the pandemic and remains 7.1 percent below its February 2020 level.
Professional and business services followed closely behind, adding 89,000 jobs in management occupations, architectural and engineering services, and research and development. This sector, which suffered little during the pandemic, is now almost a million jobs above where it was before the last recession.
Charleen Ferguson has been part of this boom. As the director of sales and marketing for a technology services provider in Dallas, she has struggled for months to hire qualified workers at wages she can afford.
“People we used to pay $22 an hour to start are now asking $35 to $40 an hour,” Ms Ferguson said. “Most of them applying for jobs haven’t even finished school.”
His firms’ clients include accountants, manufacturers and local chambers of commerce, all nervous about the direction of the economy. For now, it’s holding the line, investing in automation software and trying to keep its workers.
“This is not the time to get rid of your employees and not do your usual marketing, no matter what business you’re in,” said Ms. Ferguson.
The only broad industry the biggest job loss in July was auto manufacturing, which lost about 2,200 as companies continued to struggle to obtain the parts needed to produce finished vehicles. The public sector added 57,000 employees, especially teachers, but remained 2.6 percent below its pre-pandemic level.
In crucial industries like technology, if some employers begin layoffs, those workers are likely to be absorbed by companies that would have liked to staff but couldn’t find people. And for many types of businesses, if orders slowed more broadly, enough had built up to bolster payrolls in the fall.
For example, with rising and new mortgage rates housing begins i permissions starting to fall, residential construction jobs are expected to decline. However, the construction sector added 32,000 jobs in July.
“In industries where we would normally see this initial slowdown (construction, manufacturing, automotive) due to supply chain issues, there is a lag,” said Amy Glaser, senior vice president of business operations at the global company Adecco staff. “This also helps us navigate during this time, because it will take us several months to catch up.”
Paradoxically, the fear of a recession may be motivating more people to take jobs while they are still available and to stay rather than leave. The number of unemployed people 27 weeks or more sank to 1.1 million in July, while the share of people quit your job has been flat or down since February. Small businesses have it reported that, although recruitment remains a major concern, the availability of workers has improved slightly in recent months.
“Workers generally have had the luxury of choice over the past year in deciding which of the multiple offers to choose,” said Simona Mocuta, chief economist at State Street Global Advisors. “If, in fact, the consumer sentiment surveys are correct and the feeling is that things are starting to turn around, then maybe there’s an incentive for you to pick up and get it over with.”
However, in a substantial asterisk to the report’s broad strength, high demand has done little to expand the ranks of available workers by pushing people out of the labor market.
The overall labor force participation rate fell slightly to 62.1 percent, 1.3 percentage points below the level in February 2020. Policymakers have been watching this number closely, because a larger group of available workers could contain labor costs and help ease inflation.
The over-55s, in particular, haven’t been looking for work in large numbers, even as bank accounts that swelled during the pandemic have been depleted and the stock market slump has taken some from 401(k) accounts, raising fears of inadequate retirement savings. .
Some of it, you try suggests, could be due to the increasing prevalence of long debilitating Covid. John Leer, chief economist at polling and analysis firm Morning Consult, said the polls showed that concerns about the infection persisted, but also that there might not be enough awareness of the opportunities available.
“I think it’s a reflection of information asymmetries,” said Mr. to read “We know there are a lot of deals out there, but if you’re sitting on the sidelines, it’s very difficult to know that your skills, maybe in a restaurant, could quickly transform and move into transportation or storage.”
Jessica Buckley, who lives in Maine, has been one of those considering a new career, but hasn’t quite taken the plunge, even though the rate of job offers is above the national average.
She worked in agricultural marketing until about a decade ago, when she decided to stay home with her children. When she started looking for work again, she found nothing comparable available in the region, and has been reluctant to switch fields as long as the family can get by on her husband’s income.
Increasingly, though, she’s open to becoming a paralegal, or even working in restaurants, where wages have risen 18.6 percent, not adjusted for inflation, since the pandemic began .
“I would also start bartending, or even bartending again, because there is something attractive about turning up, doing something and leaving,” said Ms Buckley, who is 52. “Everything is on the table.”
Ben Casselman contributed reporting.