The US labour market remained stable last month, raising expectations that the economy will avoid a devastating downturn.
Similar to June, employers added 187,000 jobs, and the unemployment rate decreased to 3.5% from 3.6% the previous month.
The study was the most recent evidence of the US economy’s resiliency in the face of a significant increase in borrowing costs.
Since last year, hiring has slowed and has performed better than many had anticipated in July.
Since the Federal Reserve rapidly increased borrowing costs last year in response to prices growing at their fastest rate in four decades, economists have been predicting a downturn in the largest economy in the world.
Inflation, or the rate at which prices rise, has significantly decreased since the Fed began hiking interest rates, coming in at just 3% in June.
However, according to Fed Chairman Jerome Powell, for policymakers to be sure that their initiatives are successful, they need to see other indications that the economy is slowing down.
The latest numbers, according to analysts, are unlikely to resolve that issue because the jobless rate stayed close to historic lows and pay growth outperformed expectations despite a slowdown in hiring. According to the Labour Department, the average hourly wage in July was 4.4% higher than it was a year earlier.
According to Richard Flynn, managing director of Charles Schwab UK, “Last month’s results offered evidence that employment growth had started to slow, and today’s numbers indicate that a downward trend may be in motion. “While the Fed would probably prefer to see wage increases closer to 3%, this should be positive for policymakers as they fight sticky inflation.
Less jobs were added in July (187,000) than the 200,000 analysts had predicted.
Jobs were lost in the manufacturing, transportation, technology, and media sectors. The majority of other industries grew, with health care businesses leading the growth. Additionally, the Labour Department reported that hiring in June and May was weaker than anticipated. However, according to economists, the growth of the labour force has remained robust enough to offset population rise.
That has given rise to hopes that the economy will sputter gradually rather than abruptly, which would result in millions of people losing their jobs. Mark Zandi, chief economist at Moody’s Analytics, said it “couldn’t have been much better” while Julia Pollak, economist at the jobs website Zip Recruiter, called it a “goldilocks” report.
