The US job market rebounded strongly in July. According to the Bureau of Labor Statistics (BLS), the world’s largest economy managed to add 943,000 nonfarm payrolls last month.
At the same time, the unemployment rate fell by half a percentage point to 5.4% . The most notable increases in employment were in the leisure and hospitality sector, in local government education, as well as in professional and business services.
“The strongest increase of 943,000 non-farm payrolls in July and the upward revision of the gain in June indicate that employment growth has changed at a higher rate and that the drag on hiring by the labor shortage is decreasing, “acknowledges Andrew Hunter, an economist at Capital Economics. Upward revisions to employment in May and June resulted in 119,000 more jobs than previously anticipated.
As this warns, it suggests that economic growth may be holding up better than feared and leaves open the possibility that Fed Chairman Jerome Powell may drop a stronger track three weeks from now , during the Jackson Hole symposium. , in Wyoming, that tapering (the reduction in the purchase of debt by the central bank) is on the way.
“The burden of hiring due to the shortage of labor is diminishing”
The number of unemployed fell by 782,000 people, to 8.7 million. These figures have dropped considerably from their peaks at the end of the recession between the end of February and April 2020. However, they remain well above their pre-pandemic levels , when unemployment hovered at 3.5% and registered 5.7 million Americans out of work.
For their part, the long-term unemployed (those who have been out of work for 27 weeks or more) fell by 560,000 in July, to 3.4 million, but it is 2.3 million higher than in February 2020. The rate of Labor force participation barely changed , standing at 61.7%, and has remained within a narrow range of 61.4% to 61.7% since June last year.
At the same time, the number of people who are not part of the workforce and currently want a job was 6.5 million, an increase of 1.5 million since February 2020 .
“The US economy has generated an incredible 1.9 million new jobs in just 60 days”
Last month 5.2 million Americans declared that they had not been able to work because their employer closed or lost their business due to the pandemic; that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic. This measure is lower than the 6.2 million in June.
For Jay Mawji, director of global liquidity provider IX Prime, “This is a practically first-rate employment report. After the upward revision of the June total, the US economy has generated an incredible 1.9 million new jobs. of work in just 60 days . ” “Meanwhile, the unemployment rate is falling rapidly. Although it is still above its pre-pandemic level it is now starting to look almost benign,” he adds.
From April last year to last July, non-farm payrolls increased by 16.7 million but remained 3.7% below pre-Covid-19 levels.
Employment in the leisure and hospitality sector increased by 380,000 people. Local public education increased, generating 221,000 jobs and private, another 40,000. Payroll in professional and business services increased by 60,000 while transportation and warehousing added 50,000. Employment in the health area created 37,000 payrolls and the manufacturing industry another 27,000.
In July, the median hourly wage for all employees rose 11 cents to $ 30.54 after increases in the previous three months.
Lurking for the delta variant
These data come at a time when the services sector expanded in July at a faster rate than the previous month, as reported this week by the Institute of Management and Supply (ISM, for its acronym in English).
It is true that while consumer spending growth relative to pre-pandemic levels slowed since the beginning of last month, the slowdown was due to the slowdown in online shopping, while in-person sales remained stable. .
Initial claims for jobless benefits, an indicator of layoffs, have been flat in recent weeks, despite increases related to rising delta infections. Of course, despite the fact that current levels are almost double those registered before the pandemic, they are much lower than at the beginning of it.
That said, the July data does not reflect the potential impact of the rebound in infections on this side of the Atlantic, given that most of the surveys were conducted in mid-July. Since then, some local governments have reimposed mask-wearing mandates and other restrictions.
For their part, there are many companies and employers that require their workers to use masks and be vaccinated as well as to undergo periodic tests. Many companies have also delayed their back-to-office plans, including Amazon, Google, Uber, and Wells Fargo, among others.