The US labor market remained stable last month, raising expectations that the economy will avoid a devastating downturn.
Similar to June, employers added 187,000 jobs, and the unemployment rate decreased to 3.5% from 3.6% the previous month.
The study was the most recent evidence of the US economy’s resiliency in the face of a significant increase in borrowing costs.
Since last year, hiring has slowed and has performed better than many had anticipated in July.
Since the Federal Reserve rapidly increased borrowing costs last year in response to prices growing at their fastest rate in four decades, economists have been predicting a downturn in the largest economy in the world.
Inflation, or the rate at which prices rise, has significantly decreased since the Fed began hiking interest rates, coming in at just 3% in June.
However, Fed Chairman Jerome Powell has stated that for policymakers to be certain that their actions are successful, they need to see other indications of the economy’s cooling.
Analysts claimed that despite a slowdown in hiring, the most recent data was unlikely to resolve that issue because the jobless rate remained close to historic lows and pay growth outperformed expectations.
The Labor Department said that the average hourly salary in July was 4.4% more than it was a year earlier.
- US economy’s springtime boom outperforms predictions.
- US interest rates rise to their highest level in 22 years.
According to Richard Flynn, managing director of Charles Schwab UK, “Last month’s results offered evidence that employment growth had started to slow, and today’s numbers indicate that a downward trend may be in motion.”
While the Fed would probably prefer to see wage increases closer to 3%, this should be positive for policymakers as they fight sticky inflation.
Less jobs were added in July (187,000) than the 200,000 analysts had predicted.
Jobs were lost in the manufacturing, transportation, technology, and media sectors. The majority of other industries grew, with health care businesses leading the growth.
Additionally, the Labor Department reported that hiring in June and May was weaker than anticipated.
However, according to economists, the growth of the labor force has remained robust enough to offset population growth.
As a result, there are now more reasons to believe that the economy will decline gradually rather than abruptly, which would result in the unemployment of millions of people.
Mark Zandi, chief economist at Moody’s Analytics, called the report released on Friday “couldn’t have been much better,” while Zip Recruiter’s economist Julia Pollak called it “goldilocks.
