U.S. job growth blew past expectations in July, adding 528,000 jobs and officially reaching the point where we’ve recovered the 22 million jobs lost during the pandemic, according to the Labor Department.
The volume of job gains, the largest in six months, surprised many economists given recent interest rate hikes, high inflation and a volatile stock market. New jobs in leisure and hospitality, professional and business services, and health care led the gains.
“Amid stiff headwinds and rising uncertainty, strong consumer spending continued to drive robust demand for labor and buoy the labor market,” said Julia Pollak, chief economist at ZipRecruiter, in a statement.
“The outlook from the jobs report today is that the economy continues to go gangbusters,” said Christopher Kayes, management professor at the George Washington University School of Business, in a statement. “This is a blowout jobs report with almost twice as many jobs created than people had predicted.”
“I think this is really going to make people continue to question whether the economy is going to be tanking,” he added.
In another positive sign, the average unemployment rate ticked down to 3.5%, and people who experienced job loss were unemployed for a median of 8.5 weeks. Pollak says this suggests the labor market is tight enough that people being laid off are getting hired into new jobs quickly.
Job growth doesn’t signal a recession, at least not yet
Despite overall job growth, Pollak said two other measures signal conflicting stability in the job market. First, the number of people working part-time for economic reasons rose, signaling that people are having trouble finding full-time work. However, temp jobs, often staffed through agencies, also increased, which is a good sign that these workers, who tend to be the first let go during budget cuts, are still in demand.
Average hourly earnings are up 0.5% for the month and 5.2% from the same time a year ago, though wage growth appears to be slowing, Heidi Shierholz, president of the Economic Policy Institute, wrote on Twitter.
Decelerating wage growth could mean “the Fed doesn’t need more interest rate increases to contain inflation,” she said. “Though today’s release underscores we’re almost surely not in a recession now, the Fed may have already overshot and secured a recession in coming months.”
Job gains remain uneven for government, women and Black workers
While the labor market has recovered all private-sector jobs lost during the pandemic, government jobs remain down by nearly 600,000 — “a troubling phenomenon for public sector workers and the vital services they provide,” wrote Elise Gould, senior economist with the Economic Policy Institute, on Twitter.
Women gained 327,000, or about 62%, of new jobs in July, marking 19 consecutive months of job growth, according to the National Women’s Law Center. But despite recent momentum, women are still down 100,000 net jobs since pre-pandemic.
Men have recovered all their net job losses and now hold 132,000 more jobs today than in February 2020.
And while the overall unemployment decreased to 3.5%, near record lows, it increased for Black workers up to 6% in July.
70% of workers are optimistic about the job market, if not the economy
Despite gloomy recession forecasts as of late, workers seem to be confident in their ability to find a new job if they want one or are forced to look for new work.
A majority, 70%, of workers have an optimistic outlook on the labor market, according to a June survey of more than 1,500 people from Greenhouse, the recruitment software company. The same share, 70%, believe the U.S. will enter a recession in the next six months. And though many anticipate their wages would fall during an economic downturn, 66% of people said they would actively look for a new job if their current employer cut their pay.
Indeed, Kayes said the latest job numbers indicate the Great Resignation is still going strong isn’t likely to end soon.
“I think a lot of it is going to be shocking to those managers, those CEOs, those leaders who think that a recession will be something that allows them to hire more people, that it’s going to change the job market,” Kayes said. “There will still be more positions than there are people to fill them, and organizations that don’t change the way they do business are going to continue to fall short in hiring.”
Recent headlines of high-profile layoffs, especially at tech companies, don’t seem to be an indicator of broad layoffs ahead. Layoffs made up 1% of the workforce in June, near record lows, according to the Labor Department.
“We are not seeing, for the most part, increases in layoffs at all,” said Rucha Vankudre, senior economist at Lightcast, during a briefing Friday. “There’s a few companies that really built up their labor force because they had the money. And so now maybe they’re cutting back to the regular levels, but that doesn’t necessarily signal anything for the labor force as a whole.”
One certainty: Today’s job market, contrasted with other economic indicators like falling gross domestic product, is making it really unclear about how workers will fare in the coming months.
The picture today is “so incredibly different from anything we’ve ever experienced,” said Ron Hetrick, senior economist at Lightcast.
“Employers are still starving to get employees,” he says. “They were never able to hire them when they had so much demand. So I think everybody needs to keep an open mind because things could look very, very different this time around. And I absolutely believe this is not going to be the kind of pain that we usually associate with a recession, historically speaking.”
Check out:
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