528,000 Jobs Added in July

528,000 Jobs Added in July
Now Hiring sign at business | Image by Shutterstock

The U.S. Labor Department released a stronger-than-expected jobs report Friday, showing 528,000 jobs were added in July.

July’s staggering increase was more than double the 250,000 economists were anticipating, according to Refinitiv.

  • Non-farm payrolls: + 528,000 vs. + 250,000
  • Unemployment rate: 5% vs. 3.6%
  • Average hourly earnings, month-over-month: +0.5% vs. +0.4%
  • Average hourly earnings, year-over-year: +5.2% vs. +4.9%

Despite tightening economic conditions and fears of a recession, the U.S. labor market has officially recovered to pre-pandemic levels.

Neil Dutta, Renaissance Macro Research’s head of U.S. economics, said with such a strong jobs report, talk of recession and a pivot from Federal Reserve Board Chairman Jerome Powell is premature. “The July employment report was an absolute knock-out, a major upside surprise relative to my expectations and indeed much of the labor market data released up to this point,” he said.

According to the report, the leisure and hospitality sector led the job gains, adding 96,000 in July.

The professional and business services sector added 89,000 jobs; federal, state, and local governments added 57,000 jobs; and healthcare, 70,000. The construction sector added 32,000 jobs, twice June’s figure, even as home building and construction spending have softened. The manufacturing and retail sectors added 30,000 and 22,000 jobs, respectively.

Despite the “knock-out” report, Dutta believes the data is consistent with an inflationary boom. The Fed has a lot more work to do, said Dutta. It needs to get more aggressive in pushing up rates, even if that makes the hard-landing scenario more likely.

Boston College economist Brian Bethune does not believe the U.S. is falling into a recession.

“It is actually picking up speed as demand for services accelerates in a post-Covid-19 environment,” he said.

The report reveals a disconnect between data showing an increase in jobless claims while there has been a decrease in the unemployment rate.

With data supporting such a red-hot job gain in July, Powell will be less likely to pivot from his streak of rate hikes at the next Federal Open Market Committee (FOMC) meeting in September, according to reporting from The New York Times.

According to economists at Bank of America, the Fed is projected to raise rates 50 basis points at the next two meetings, in September and November, followed by a 25-basis-point bump in December. At the last two meetings, the Fed raised its interest rate target by 0.75 basis points, the most since 1994.

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1 Comment

  1. caseyp

    There is a difference between jobs added and vacant positions being filled. More Democrat smoke and mirrors.


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