US economy Add 528000 powerful jobs in July, to recover the number of jobs lost in the wake of the pandemic.
The Labor Department said Friday that the unemployment rate also fell to 3.5%, the lowest level in half a century also seen just before the pandemic in early 2020. The acceleration comes after the first half of the year during which payrolls grew faster than in any other period after World War II when the economy began to contract.
The labor force participation rate – or the proportion of adults working or looking for work – fell to 62.1% in July from 62.2% the previous month. Average hourly wages grew 5.2% in July from a year earlier, a slight acceleration from the previous month.
Job gains spread widely last month. Leisure and hospitality employers added jobs in a steady clip, as restaurants and bars continued to recover. Payroll has also grown into health care, professional and business services, which includes many white collar jobs.
Industries exposed to Fed rate hikes also performed well in July. Construction companies, manufacturers, and finance companies were added to the payroll.
US stock futures fell after a stronger-than-expected jobs report.
Businesses continued to hire despite the economic downturn for two straight quarters, lowering consumer spending and raising recession risks. Employment has also generally returned to pre-pandemic levels. But demand for workers in some sectors is falling as the economy transitions away from the sharp expansion that followed the lifting of Covid-19-related restrictions on business activity.
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It’s reducing headcount, but overall layoffs are slowly rising, according to weekly jobless claims.
“Companies used to have access to layoffs as the first option,” said Greg Dako, chief economist at EY-Parthenon, a consultancy. “We now see slower hiring as the number one option, followed by targeted hiring freezes, followed by targeted layoffs, followed by broader layoffs.”
U.S. job opportunities remained high but fell in June to a nine-month low and fell by 600,000 compared to May, according to a separate report from the Labor Department released on Tuesday. Total job opportunities remained much higher than the number of unemployed workers looking for work.
Federal Reserve officials hope they can achieve a “soft landing” for the US economy as they try to bring down the highest rate of inflation in four decades without a significant increase in unemployment. Federal Reserve Chairman Jerome Powell recently told reporters that the number of job openings could fall dramatically without a significant rise in unemployment.
So far, average weekly layoffs have only risen slightly, and anecdotal evidence suggests they are primarily affecting sectors such as technology and real estate, which are more sensitive to higher interest rates. A number of technology companies, including Microsoft corp.
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In recent months, employees have been laid off or hiring has halted to deal with slowing growth and the fallout from other macroeconomic factors.
Workers remain in high demand in sectors that have not fully recovered from Covid-19, including entertainment, hospitality, education and healthcare.
Matt Zipato, CEO of Life’s WORC, a nonprofit that operates group homes, job training and other programs for individuals with developmental disabilities in New York City and nearby counties, said his agency’s staffing challenges are approaching crisis levels. Among the 730 positions for direct support professionals – employees who assemble homes around the clock – Mr. Zebatto tries to fill more than 200.
The organization was hampered by reimbursement rates from government health care programs like Medicaid that did not keep pace with the wages prevailing in the labor market, harming his ability to employ. In many areas, the rate is currently $15 per hour, and even adjusted for projected inflation, the rate will still be under $16. Staff shortages is a major issue, due to the level of care required by many group home residents. And when existing employees need to constantly work overtime shifts, it leads to more burnout and employee turnover.
“You can’t automate helping someone put an adult diaper or helping someone in the bathtub,” Mr. Zipatto said. “I am grateful that someone working in the service industry gets what they can get, but it makes it more difficult for us,” he said of higher-paid workers who could earn working elsewhere.
Despite the cooling in the labor market, some economists expect more people to look for work as inflation affects household budgets.
Rapid price hikes are the main reason older workers are unwilling to work, according to a survey by job site ZipRecruiter..
In the company’s June survey, of the 21.5% of current job seekers who said they had previously retired at some point, 35.8% ranked inflation as the number one reason for their return to the job market. 26.2% said they are rejoining the workforce because their retirement savings are running out.
Workers who seek better jobs tend to lose influence as the labor market cools and they are more likely to take jobs they don’t care about much. Tess Devilliers of Austin, Texas, took a job last month in the warehouse packaging and freight division after working in a series of retail, administrative and teaching positions in recent years.
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Her cost of living has skyrocketed in Austin, a city that has experienced rapid growth in recent years. She needed to find a new job to be able to mention a source of income in her apartment application. She also had talks with a recruiter for substitute teachers and applied for a customer service job at a phone company, but decided to take the job at the warehouse because she could start almost immediately and settle her housing situation.
“It doesn’t pay. [as] As much as I feel I should, but I also don’t want to become homeless,” she said of her new position.
Economists say that more slack in the labor market is likely to reduce workers’ influence over hours, wages and benefits.
“We are already seeing a somewhat lowered confidence in job seekers,” said Julia Pollack, chief economist at ZipRecruiter. “Just small movements at the moment, but the changes are all in the same direction: a decrease in bargaining power and leverage.”
write to Gabriel T. Rubin at [email protected]
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