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Minneapolis
CNN
—
The US job market has returned to pre-pandemic form.
Employers added just 187,000 jobs in July, slightly above the monthly average seen in the decade before the pandemic, according to new data released Friday by the Bureau of Labor Statistics.
Economists were expecting a net gain of 200,000 jobs last month. June’s job growth was revised down to 185,000 jobs from 209,000.
“The labor market’s still resilient, there’s still more job opportunities out there than there are candidates looking for work,” said Amy Glaser, senior vice president at staffing firm Adecco. “It matches what we’re seeing, and I think it’s going to continue in this manner.”
July’s headline number and the downward revisions to the monthly job total for May and June (down 25,000 jobs and 24,000 jobs, respectively), are further indications that the nation’s labor market is gradually cooling off. Moreover, it further fuels the notion that the Federal Reserve can achieve a “soft landing” of reining in inflation without massive layoffs.
And although the strong jobs data lands just days after the United States was downgraded by Fitch Rating for its fiscal health, Friday’s report is also the latest in the line of positive economic news that either kicks recession predictions further down the road or erases them entirely.
The July unemployment rate ticked down to 3.5%, from 3.6%. During the past 16 months, the jobless rate has hovered between 3.5% and 3.7% — levels not seen in more than 50 years.
“It’s kind of the Goldilocks economy,” Brian Bethune, economist and professor at Boston College, told CNN. “It’s not too fast, and it’s not too slow, and that’s precisely where you want to be.”
There has to be sufficient growth to generate productivity gains, which are crucial for keeping inflation down, he said.
The Fed is in the throes of a 16-month campaign to try to curb decades-high inflation by suppressing demand. The central bank has raised its benchmark interest rate 11 times from essentially 0 to a range of 5.25% and 5.5%, a 22-year high.
Key inflation gauges have showed that price increases have cooled considerably during the past year while the US economy continues to grow.
Industries seeing the largest job gains in July were health care, social assistance, financial activities and wholesale trade.
Gains were more muted in the leisure and hospitality industry, which has been hiring like gangbusters to back fill deep pandemic losses and keep up with consumers who have a seemingly insatiable (and understandable) demand for out-of-the-house experiences.
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“There are weaker gains [in leisure and hospitality], although they remain understaffed relative to pre-Covid levels,” Andrew Patterson, global chief economist with Vanguard’s Investment Strategy Group, told CNN. “But that might be a sign of maybe a cooldown in discretionary spending.”
Fed officials have been hoping their aggressive rate-hiking campaign would bring about a slowdown in the job market — especially in wage gains, which are viewed as a contributor to inflation.
Economists were expecting to see a slight moderation in wage gains; however, those held steady for the second-consecutive month.
Friday’s report showed that average hourly earnings growth was unchanged at 0.4% from the month before and also unchanged at 4.4% year-over-year.
“The Fed’s going to want to see that come down,” Patterson said. “So, reason to believe that there’s signs of weakening in the labor market, but the Fed still has more work to do.”
Economists had projected a monthly gain of 0.3% and a 4.2% annual increase, according to Refinitiv.
Labor force participation also held steady at a 62.6% rate, according to the report.
This story is developing and will be updated.
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