# U.S. job growth surges in July as labor market defies recession fears
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-05
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: U.S. Job Growth Accelerates in July, Economy Not in Recession
Meta Description: In a strong labor market, U.S. job growth surged in July, reaching pre-pandemic levels with high wage inflation, likely impacting Federal Reserve's rate
URL: https://financedigest.com/u-s-job-growth-surges-in-july-as-labor-market-defies-recession-fearshtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-05t041243z2lynxmpei7404prtroptp4usa-economy-1736815504769-compressed.jpg)

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth unexpectedly accelerated in July, lifting the level of employment back to its pre-pandemic level, the strongest evidence yet that the [economy was not in recession](https://www.financedigest.com/german-economy-expected-to-skirt-recession-economy-ministry-report.html "German economy expected to skirt recession – economy ministry report").

The Labor Department’s closely watched employment report on Friday also showed employers [continuing to raise wages](https://www.financedigest.com/volkswagen-strikes-below-inflation-wage-deal-continues-german-trend.html "Volkswagen strikes below-inflation wage deal, continues German trend") at a strong clip and maintaining longer hours for workers. The sustained labor [market strength could put pressure on the Federal Reserve to keep its aggressive interest rate hikes](https://www.financedigest.com/instant-view-ecb-sticks-with-big-rate-hike-even-as-bank-fears-roil-markets.html "Instant View: ECB sticks with big rate hike even as bank fears roil markets").

The combination of strong job growth, an extremely tight labor [market and stubbornly high wage inflation](https://www.financedigest.com/hungarys-booming-wedding-market-doused-by-soaring-inflation.html "Hungary’s booming wedding market doused by soaring inflation") suggests the Fed’s rate hike cadence will likely remain hefty next month,” said Michael Gregory, deputy chief economist at BMO Capital Markets in Toronto.

Nonfarm payrolls increased by 528,000 jobs last month, the largest [gain since February](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February"), the survey of establishments showed. Data for June was revised higher to show 398,000 [jobs created](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") instead of the previously reported 372,000. July marked the 19th [straight month](https://www.financedigest.com/spanish-manufacturing-output-down-for-6th-straight-month-in-dec-pmi.html "Spanish manufacturing output down for 6th straight month in Dec -PMI") of payrolls expansion.

GRAPHIC: Non-farm payroll (https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/zjpqkyjzbpx/chart.png)

![Non-Farm payroll](https://www.globalbankingandfinance.com/wp-content/uploads/2022/08/404-716x500.jpg)

Economists polled by Reuters had forecast payrolls would rise by 250,000 [jobs and the unemployment rate](https://www.financedigest.com/u-s-job-growth-powers-ahead-unemployment-rate-at-3-4.html "U.S. job growth powers ahead; unemployment rate at 3.4%") remain steady at 3.6%. Estimates for the number of jobs [gained ranged from a low](https://www.financedigest.com/dollar-steadies-near-16-week-low-yuan-set-for-biggest-weekly-gain-since-2005.html "Dollar steadies near 16-week low, yuan set for biggest weekly gain since 2005") of 75,000 to a high of 325,000.

The labor [market has now recouped all the jobs lost during the COVID-19 pandemic](https://www.financedigest.com/condition-monitoring-service-market-buoyant-with-flourishing-power-generation-industry-adoption-exhibits-a-notable-decline-amid-covid-19-pandemic-fmi.html "Condition Monitoring Service Market Buoyant with Flourishing Power Generation Industry; Adoption Exhibits a Notable Decline Amid COVID-19 Pandemic: FMI"), though government employment remains about 597,000 jobs in the hole.

GRAPHIC: U.S. employment [achieves full](https://www.financedigest.com/what-businesses-can-achieve-with-microsofts-full-suite-of-process-automation-tools.html "What businesses can achieve with Microsoft’s full suite of process automation tools") recovery (https://graphics.reuters.com/USA-ECONOMY/JOBS/zdpxozdmyvx/chart.png)

![U.S. employment achieves full recovery](https://www.globalbankingandfinance.com/wp-content/uploads/2022/08/405.jpg)

The Federal Reserve last week [raised its policy rate](https://www.financedigest.com/boe-raises-rates-again-as-investors-look-towards-end-of-hikes.html "BoE raises rates again as investors look towards end of hikes") by three-quarters of a percentage point. The U.S. central [bank has hiked](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade") that rate by 225 basis points since March.

The economy contracted 1.3% in the first [half of the year](https://www.financedigest.com/an-apple-a-year-half-of-iphone-users-will-upgrade-to-the-iphone-7.html "AN APPLE A YEAR: HALF OF IPHONE USERS WILL UPGRADE TO THE IPHONE 7"), largely because of big swings in inventories and the trade deficit tied to snarled global supply chains.

The National Bureau of Economic Research, the official arbiter of recessions in the United States, defines a [recession as “a significant decline in economic activity spread across the economy](https://www.financedigest.com/world-bank-warns-global-economy-could-easily-tip-into-recession-in-2023.html "World Bank warns global economy could easily tip into recession in 2023"), lasting more than a few months, normally visible in production, employment, real income, and other indicators.

With 10.7 million [job openings at the end](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") of June and 1.8 openings for every unemployed person, the labor market remains tight and economists do not expect a sharp deceleration in payrolls growth this year.

U.S. [stocks opened](https://www.financedigest.com/world-stocks-upbeat-on-hopes-for-china-re-opening-inflation-peaking.html "World stocks upbeat on hopes for China re-opening, inflation peaking") lower. The [dollar rallied against a basket of currencies](https://www.financedigest.com/u-s-dollar-advances-vs-major-currencies-as-risk-appetite-fades.html "U.S. dollar advances vs major currencies as risk appetite fades"). U.S. [Treasury prices](https://www.financedigest.com/stocks-jump-as-treasury-yields-ease-and-oil-prices-sell-off.html "Stocks jump as Treasury yields ease and oil prices sell off") fell.

WIDESPREAD GAINS

The broad [job gains last month were led by the leisure and hospitality industry](https://www.financedigest.com/best-paying-jobs-in-industrial-specialties.html "Best paying jobs in industrial specialties"), which added 96,000 positions, most of them at restaurants and bars. But leisure and hospitality employment remains down by 1.2 [million from its February 2020 level](https://www.financedigest.com/global-covid-19-cases-hit-250-million-eastern-europe-infections-at-record-levels.html "Global COVID-19 cases hit 250 million, eastern Europe infections at record levels").

Professional and [business services payrolls increased](https://www.financedigest.com/frances-ynsect-to-refocus-bug-business-after-capital-increase.html "France’s Ynsect to refocus bug business after capital increase") by 89,000, while healthcare added 70,000 jobs. Government employment jumped by 57,000 jobs. [Construction added 32,000 jobs while manufacturing](https://www.financedigest.com/the-next-upcoming-years-to-see-the-oral-solid-dosage-contract-manufacturing-market-integrating-constructive-innovation.html "The Next Upcoming Years To See The Oral Solid Dosage Contract Manufacturing Market Integrating Constructive Innovation") payrolls increased by 30,000.

Details of the household survey from which the [unemployment rate](https://www.financedigest.com/spains-unemployment-rate-inches-up-to-12-87-in-q4-2022.html "Spain’s unemployment rate inches up to 12.87% in Q4 2022") is derived were mixed. While the unemployment [rate fell to its pre-pandemic low](https://www.financedigest.com/stocks-slump-to-2-year-low-as-rates-reality-bites.html "Stocks slump to 2-year low as rates reality bites") of 3.5% from 3.6% in June, that was because 63,000 people left the labor force.

The [labor force participation rate](https://www.financedigest.com/dollar-firms-after-u-s-labor-data-suggests-more-rate-hikes.html "Dollar firms after U.S. labor data suggests more rate hikes"), or the proportion of working-age Americans who have a job or are looking for one, edged down to 62.1% from 62.2% in June. The number of people [working part-time for economic reasons increased by 303,000 after plunging to more than a 20-year low](https://www.financedigest.com/low-use-of-shortened-work-hours-points-to-mild-german-recession-ifo.html "Low use of shortened work hours points to mild German recession – Ifo") in June.

But household [employment rebounded by 179,000 jobs after falling](https://www.financedigest.com/uk-employers-see-slight-fall-in-pay-awards-over-2023-xperthr.html "UK employers see slight fall in pay awards over 2023 – XpertHR") 315,000 in June, and the number of the people experiencing long spells of unemployment dropped sharply.

[Average hourly earnings increased](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") 0.5% last month after rising 0.4% in June. That left the year-on-year [increase in wages](https://www.financedigest.com/greece-to-increase-minimum-wage-again-before-election.html "Greece to increase minimum wage again, before election") at 5.2%. Though wage growth appears to have peaked, pressures remain. [Data last week showed annual wage growth](https://www.financedigest.com/bridge-the-gaps-in-big-data-and-cross-into-a-world-of-growth.html "Bridge the gaps in Big Data – and cross into a world of growth") in the second quarter was the fastest since 2001.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---