Source: AUN News
Despite widespread predictions of a downturn as the Federal Reserve raises interest rates to combat inflation, U.S. job growth increased in July across almost all industries, bringing national employment back to its pre-pandemic level.
The Labor Department said on Friday that employers added 528,000 jobs on a seasonally adjusted basis, more than twice what analysts had predicted. The unemployment rate decreased slightly to 3.5 percent, matching February 2020’s 50-year low.
The Biden administration is relieved by the strong employment growth in a financial year marked by high inflation and recessionary fears. President Biden said, “Today’s jobs report demonstrates we are making substantial progress for working families.”
The ongoing strength of the job market is all the more remarkable given that the GDP, adjusted for inflation, has fallen for two consecutive quarters and that consumer confidence in the economy has dramatically declined, along with the president’s approval ratings.
Even though employment growth is an economic North Star, economist Justin Wolfers from the University of Michigan said, “I’ve never seen a disjunction between the numbers and the overall mood nearly as great as I witnessed.” It is important to note that these data are significantly more dependable than G.D.P. when trying to gauge the health of the broader economy.
However, the data might make the Federal Reserve more determined to slow the economy down. Over the previous year, wage growth accelerated to 5.2 percent, suggesting that rising labor costs may contribute to price increases.
In its fight to stop the steepest inflation in four decades, the Fed has raised interest rates four times, and policymakers have hinted that there will be more increases in the future. This tactic will probably result in a slowdown in hiring later in the year as businesses reduce payrolls to reflect the anticipated decline in demand.
James Knightley, the head international economist of the bank ING, declared that things are currently well. We may observe significantly softer results in, let’s say, December or the first quarter of the following year.
The country lost close to 22 million jobs when the pandemic started. Even while employment is still lower than what would have been predicted if Covid-19 had not occurred, the recovery has been faster than those following prior recessions.
Even though consumers have been transferring their spending from commodities to experiences outside the home unavailable during the two years of public health restrictions, the advances in July were the largest in five months. They were seen almost everywhere in the economy.
The Situation with Jobs in the USA
The fact that employment growth in July significantly outpaced projections demonstrates that, despite the Federal Reserve’s efforts to slow the economy, the labor market is not slowing down.
Ninety-six thousand new jobs were added in the leisure and hospitality sector, including 74,000 in bars and restaurants, to lead the gains. The industry has recovered from the pandemic’s losses the slowest of any, and it is still 7.1% below where it was in February 2020.
Adding 89,000 jobs in managerial occupations, architecture and engineering services, and research and development, professional and business services came in second. That industry, which didn’t experience much damage during the epidemic, now has roughly a million more employees than before the previous recession.
That boom included Charleen Ferguson. She has battled for months to find skilled employees at prices she can afford in her capacity as the sales and marketing director of a Dallas-based provider of technological services.
The workers we first hired at a rate of $22 an hour are now demanding $35 to $40 an hour, according to Ms. Ferguson. Most of the people that seek jobs haven’t even completed their education.
Accountants, manufacturers, and regional chambers of commerce are a few of her firm’s clients who are concerned about the state of the economy. For the time being, she is holding the line, spending money on automation tools, and trying to keep her employees.
Regardless of your business type, Ms. Ferguson emphasized that now is not the time to fire your staff or stop doing your usual marketing.
As businesses struggled to locate the parts required to create finished automobiles, the auto manufacturing sector was the only broad industry to experience employment losses in July, losing nearly 2,200 positions. The public sector recruited 57,000 workers, primarily teachers, yet it still has 2.6 percent of the prepandemic workforce.
Suppose some organizations start laying off employees in critical fields like technology. In that case, those individuals are likely to be absorbed by businesses that would have liked to staff up but couldn’t find people. Additionally, enough has accumulated for many different firm types to support payrolls through the fall, even if orders generally slow down.
For instance, it would be reasonable to anticipate a reduction in residential construction jobs due to rising mortgage rates and a beginning decline in home starts and permits. Despite this, the construction sector created 32,000 new employment in July.
There is a backlog, according to Amy Glaser, senior vice president for business operations at the multinational staffing company Adecco. “In industries where we would normally see that initial slowdown — construction, manufacturing, automotive — because of supply chain issues, there is a backlog,” she said. That is also assisting us in getting through this period because it will take some time to catch up.
Contrarily, people may be more likely to accept jobs while still accessible and choose to stay rather than move because of their fear of a downturn. In July, there were 1.1 million persons who had been out of work for 27 weeks or longer, while the percentage of those abandoning their jobs has been stable or declining since February. Although hiring is still a significant challenge for small firms, the availability of labor has slightly increased recently.
The ability to choose between several offers has generally been available to workers throughout the previous year, according to Simona Mocuta, the chief economist at State Street Global Advisors. There may be an incentive for you to make your decision and move on if the consumer sentiment surveys are accurate and it appears things are beginning to change.
High demand, however, hasn’t done much to increase the ranks of available employees by luring people off the sidelines of the job market, providing a significant asterisk for the report’s overall strength.
At 62.1 percent, the overall labor force participation rate decreased by 1.3 percentage points from February 2020. Because a wider pool of potential workers might restrict labor costs and assist reduce inflation, policymakers have kept a careful eye on that number.
Even if bank accounts that grew during the pandemic have been drained and the plunging stock market has taken a bite out of 401(k) accounts, prompting concerns over insufficient retirement funds, people over 55, in particular, have not applied for jobs in great numbers.
Evidence suggests that some may be brought on by the rising prevalence of incapacitating lengthy Covid. According to John Leer, chief economist at the polling and analytics company Morning Consult, surveys showed that concerns about infection remained. Still, they also suggested that perhaps not enough people were aware of the opportunities.
Mr. Leer stated, “I believe it to be a manifestation of information asymmetries. “We know there are many opportunities there, but if you’re on the sidelines, it’s tough to realize that your abilities, perhaps in a restaurant, might be swiftly transformed and moved into transportation or warehousing.”
Maine resident Jessica Buckley has been thinking about changing careers but hasn’t entirely leaped, even though the number of job openings in the state is higher than the national average.
Before deciding to stay home with her children roughly ten years ago, she worked in agricultural marketing. She resumed her employment search but could not find anything comparable in the area, so she has refrained from changing careers as long as the family can survive on her husband’s salary.
But she is becoming more open to working as a paralegal or even in restaurants, where earnings have increased 18.6 percent since the pandemic started — without accounting for inflation.
As for herself, 52-year-old Ms. Buckley said, “I would start bartending as well, or even going back to being wait staff because something is enticing about just turning up, doing a thing, and leaving.” “Everything is up for discussion.”
Analysis by: Advocacy Unified Network
