In an unexpected turn of events and amidst surging inflation and anxiety, the labor market added 528,000 jobs last month according to the monthly Employment Situation Summary released this morning by the Bureau of Labor Statistics. That’s the largest gain since February 2022 and more than double predictions from last week. This particular report was highly anticipated as economists, investors, and policy makers watch for signs of a recession.
Record high inflation continues to plague the US economy, and with the recent interest rate hikes, economists predicted a slowdown in hiring for July. Instead, unemployment edged down to a 50 year low of 3.5%, and nonfarm employment rates have been restored to February 2020 pre-pandemic levels. Additionally, average hourly wages increased .5% for a total increase of 5.2% over the past 12 months.
The strength of the labor market has pushed off a looming recession for now, but it could lead the Federal Reserve to raise interest rates again in an effort to curb inflation. A strong market means more competitive prices, driving inflation up even further. As we’ve seen since March, raising interest rates is the Feds first step in trying to cool the economy. With gas prices falling over the past few weeks, the economic picture remains unclear.
Another promising sign that the pandemic economy is easing, is the 96,000 jobs added in leisure and hospitality. This sector led in job growth during July, although it remains 7.1% below its February 2020 level. Within leisure and hospitality, food services and drinking places added 74,000 jobs, up from 46,000 in May.
Professional and business services added 89,000, with management of companies and enterprises adding 13,000, architectural and engineering services adding 13,000, and management and technical consulting services adding 12,000 jobs. The sector as a whole is up 986,000 jobs from pre-pandemic levels. Health care added 57,000 jobs in July. Local government increased by 37,000 jobs, mostly in education which added 27,000. Construction increased by 32,000 and manufacturing by 30,000. Employment in social assistance rose by 27,000 jobs, retail trade added 22,000, and transportation and warehousing added 21,000 jobs in July.