United States: Surprise rebound in employment, back to pre-pandemic level

United States: surprise rebound in employment, which is back to its pre-pandemic level

The unemployment rate fell to 3.5% in July in the United States, thus returning to its pre-pandemic level, despite high inflation and looming recession fears.

The US labor market showed unexpected dynamism in July, returning to pre-pandemic levels as the fight against inflation raises fears of a recession, good news for Joe Biden a few months from the crucial midterm elections.

More people are working than at any time in American history, hailed the American president who sees it the result of [his] economic plan.

There is still work to be done, but today's jobs report shows we are making significant progress for workers and their families, Joe Biden said in a statement. /p>

The country now has more jobs than in February 2020, when the job market was at its best in 50 years, just before the economy from being hit hard by the COVID-19 pandemic, the Labor Department said Friday.

Thus, 528,000 jobs were created in July, twice as many as expected, with creations in all sectors, notably in leisure and hospitality, professional and commercial services as well as health care. .

The unemployment rate falls to 3.5%, as in February 2020.

The White House had nevertheless prepared the ground Thursday for weaker job creations than before. Spokesperson Karine Jean-Pierre had described, during her daily press briefing, an American economy in transition towards less strong but more stable growth.

She even warned that fewer job creations would be a sign of the success of this transition.

The health of the labor market is currently being scrutinized very closely in the United States given fears of recession.

If this rebound supports the idea that the world's largest economy is not in recession, it is bad news for inflation though.

Especially as wages continue to climb due to labor shortages. The average hourly wage in the private sector is now $32.27, 5.2% higher than a year ago.

That, however, is not enough to compensate for inflation, which in June reached 9.1% year on year.

The central bank (Fed) is trying to cool the overheating economy, raising its rates in order to make credit more expensive and encourage consumers to spend less.

These figures should weigh heavily in the balance at its next meeting, at the end of September.

Federal Reserve Chairman Jerome Powell (archive)

They could convince its officials to strike hard, again, with a possible further increase of three-quarters of points in key rates, as in June and then in July. This hadn't been seen since 1994, a far cry from the usual quarter point.

“It's good to see so many jobs being created, but it's scary to imagine what that means for the size of the adjustment we might see coming. »

— Jason Furman, professor of economics at Harvard and former economic adviser to the White House under Barack Obama

The New York Stock Exchange thus opened sharply in the red on Friday, fearing an even stricter attitude from the Fed.

The first signs of a slowdown in employment had however been observed this week.

The number of vacancies thus fell in June. It fell below 11 million for the first time in 7 months, according to Bureau of Statistics (BLS) data released on Tuesday, but quits remained massive.

Quant weekly jobless claims, which give an indication of the level of layoffs, rose again at the end of July, and the four-week average even reached its highest level since November.

A total of 1.4 million people were receiving unemployment benefits in the United States as of mid-July, up from nearly 13 million a year ago.

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