US economy adds 528,000 jobs, far beyond expectations

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According to data released Friday by the Bureau of Labor Statistics, the U.S. hiring rate rose dramatically in July as the economy added 528,000 jobs and the unemployment rate fell to 3.5%.

The report defied expectations of a hiring slowdown as the Federal Reserve wages a war on inflation that aims to reduce demand by cooling the economy but threatens to send the country into recession.

There was evidence this week of easing in the job market amid layoffs at high-profile companies like Walmart and Robinhood, as well as a government report that showed a sharp drop in job openings in June.

The 528,000 jobs added in July are a significant increase from the 372,000 jobs added in June. In addition, the numbers indicate an improvement from the already solid hirings sustained in the first half of 2022, during which the economy added an average of 461,000 jobs each month.

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The generally robust hires in recent months defy typical recession conditions, Daniel Zhao, a senior economist at career site Glassdoor, told TBEN News ahead of the data’s release.

“It would be very unusual to have a recession if we were still adding several hundred thousand jobs per month,” he said.

While a faster rate of hiring may cheer some economists and ordinary Americans, the signal of improving labor demand could put more pressure on the Fed to push through its aggressive rate hikes. At meetings in each of the past two months, the central bank has raised its benchmark rate by 0.75% — dramatic increases last matched in 1994.

Despite a series of increases in borrowing costs designed to lower prices, inflation has not only persisted, but has worsened. Data released last month showed that prices rose a whopping 9.1% in June, representing the highest inflation rate in more than four decades.

Federal Reserve Board chairman Jerome Powell speaks at a news conference after a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, July 27, 2022.

Elizabeth Frantz/Reuters, FILE

Worryingly, the price increases have coincided with contracting economic output. Gross domestic product fell by 0.9% year-on-year in the second quarter, after a decline of 1.6% in the previous quarter.

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The recent trend qualifies for the shorthand definition of a recession consisting of two consecutive quarters of GDP decline. But the formal designation of a recession depends on a wider range of statistics weighed in by the National Bureau of Economic Research.

This year, the tight labor market has delivered a strong corner of the economy so far. But employment data indicated a weakening Tuesday, as a government report showed job openings plummeted in June to its lowest level in nine months. However, the 10.7 million job openings reported in June remain a high figure.

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Meanwhile, a slew of major companies have announced job cuts or staff delays in recent days. Walmart laid off nearly 200 company employees on Wednesday, The Wall Street Journal reported. A day earlier, Robinhood announced plans to cut 23% of its staff. Tech giants Apple, Amazon and Google parent company Alphabet recently announced they will be slowing down hiring.

For more information, TBEN News’ Aaron Katersky reports:

Last month’s better-than-expected growth means the US economy has added 22 million jobs since the bottom of the pandemic. Caleb Silver of Investopedia said there are signs that the job market will weaken, but remain sustainable for the time being ((And this just goes to show that companies are still willing to hire people even if they fear a recession, even if they fear a recession). rising interest rates and inflation that’s everywhere we look)) The unemployment rate fell to 3.5 percent, corresponding to a 50-year low just before the pandemic.

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