US created 528,000 jobs in July, defying technical recession

All theories that raising interest rates by the Fed to combat inflation would result in a downturn in the labor market were proven unfounded and wrong.

NewsEditor
NewsEditor
05 August 2022 Friday 14:56
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US created 528,000 jobs in July, defying technical recession

All theories that raising interest rates by the Fed to combat inflation would result in a downturn in the labor market were proven unfounded and wrong. The US economy added 528,000 jobs in July, more than double forecasts and well above the monthly average of 457,000 throughout this year, in a show of strength and in defiance of the technical recession.

It is the number of hirings since February despite the warnings of economic apocalypse. This level of new occupations caused the unemployment rate to fall from 3.6% to 3.5%, the lowest mark in half a century, comparable to the stellar period of the pre-pandemic, and marks an acceleration in hiring compared to June, when 398,000 new jobs were registered.

The businesses continued with their contracting policy despite two consecutive quarters of contraction in the Gross Domestic Product (GDP), the reduction in consumer spending and the risk of a greater decline in the economy.

Wages went up, 0.5% per hour during July and 5.2% in the annual calculation since the same month of 2021. These numbers, according to experts, do nothing more than add gasoline to a situation of inflation which already has consumer prices climbing at the fastest rate in over forty years.

Stock markets initially reacted downward after the Labor Department report and the Dow Jones fell 120 points.

Leisure and hospitality continued to lead hiring, with 96,000, ahead of professional services and business, with 80,000. The health sector added 70,000 and the government payroll increased by 57,000. Goods-producing industries also posted solid gains, with construction rising by over 32,000 new jobs and manufacturing by 30,000.

Analysts had predicted that 250,000 new jobs would be added last month. It was said that, under normal conditions, this figure would have been more than considerable, but in the current circumstances it would mean a slowdown this year. Even the White House, anticipating this long-awaited news, has already warned that the fall would open a period of "transition" from "a record number of jobs" to a situation of "stable and constant growth."

The downward forecast was based on the fact that the number of job offers fell in June for the third consecutive month, which was seen as evidence of the beginning of the cooling of the labor market. Unfilled offers were still at 10.7 million, a high number, but down from 11.3 million in May.

In reality, President Joe Biden once again had the opportunity on a silver platter this Friday to speak again of the strength of the US economy and to dismiss fears of a recession, at a time when it seems that the government has entered into a period of prosperity with legislative agreements for multi-million dollar investments. According to Biden and, among other experts, the president of the Fed, Jerome Powell, one cannot speak of a recession with such a powerful labor market, despite the decline in GDP.

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