U.S. employers added a booming 528,000 jobs in July as the labour market now has recovered all 22 million jobs lost in the COVID-19 pandemic and continued to defy soaring inflation, rising interest rates and a slowing economy.
The unemployment rate fell from 3.6% to 3.5%, matching a 50-year low reached just before the pandemic began in early 2020, the Labor Department said Friday.
Economists had estimated that 250,000 jobs were added last month, according to a Bloomberg survey.
“The economy is not falling into recession,” says Brian Bethune, an economist at Boston College. “It is actually picking up speed as demand for services accelerates in a post-COVID-19 environment.”
Where did jobs increase in July?
July’s payroll increases were broad-based. Leisure and hospitality, which includes restaurants and bars, the sector hit hardest by COVID-19, led the job gains with 96,000. Professional and business services added 89,000 jobs; health care, 70,000; construction, 32,000; manufacturing, 30,000; and retail, 22,000 jobs.
Federal, state and local governments added 57,000 jobs.
The employment recovery, however, masks divergent narratives for the public and private sectors. While businesses recouped all jobs lost in June and are now 629,000 positions above the pre-COVID-19 level, the government is still nearly 600,000 jobs below that benchmark. That’s mostly because state and local governments haven’t been able to provide the pay increases, remote work options and flexible hours offered by the private sector since the pandemic began in the spring of 2020.
In addition to July’s robust payroll gains, average hourly earnings rose 15 cents to $32.27, pushing the annual increase from 5.1% to 5.2% and threatening to intensify inflation pressures. And the portion of Americans working or looking for jobs fell from 62.2% to 62.1%, well below the pre-pandemic level of 63.4%. That share had been rising as workers returned to a favourable labour market after caring for children or staying idle because of COVID-19 fears. But it has broadly edged down after hitting a peak in March, suggesting widespread labour shortages could persist and push pay increases higher.