US employment grows surprisingly and returns to pre-pandemic level – SWI swissinfo.ch in English

A recruitment hall for United States Postal workers in Inglewood, California on July 18, 2022 afp_tickers This content was published on August 05, 2022 – 14:11 August 05, 2022 – 14:11 (AFP) solidly in July, showing unexpected strength as the fight against inflation raises fears of a recession. The unemployment rate, and the number of jobs, returned to the level of February 2020, just before the economy was hit hard by the covid-19 pandemic. The jobless rate fell 0.1 percentage point to 3.5%, returning to its pre-Covid-19 pandemic level, which was the lowest in 50 years, the Labor Department said on Friday. In July, the world’s largest economy created 528,000 jobs, twice as many as expected, while job creation in May and June was higher than announced, with 386,000 and 398,000 jobs respectively, 28,000 after an upward revision. “Growth was widespread, led by job creation in the leisure and hospitality, professional and business services, and health care sectors,” the Labor Department said. The labor market data buoyed President Joe Biden a few months ahead of crucial midterm elections for his term. “It is the result of my economic plan,” Biden said in a statement after the jobs report. “There is work to be done, but today’s jobs report shows that we are making good progress,” he added. The health of the labor market is being closely watched in the United States, as its deterioration could signal the approach of a recession. – “Transition” – The US economy has, in fact, contracted in the last two quarters. However, numerous economists, as well as the Biden administration, assure that it is not in a recession. They particularly highlight the strength of employment, as US employers have faced a shortage of workers for months. White House spokeswoman Karine Jean-Pierre tried to set the stage Thursday for weaker job creation than before. During her daily news conference, Saint Pierre said the US economy is “in transition” to less strong but more stable growth. “And during this transition,” he stressed, one should no longer expect the “record of jobs registered every month, of some 500,000 or 600,000 jobs. (…) We hope to be closer to 150,000 jobs (created) per month”. It would be, she said, “a sign of the success of this transition.” – Resignations – However, this week saw the first signs of a slowdown. The number of vacancies fell in June, dipping below 11 million for the first time in seven months, according to Bureau of Statistics (BLS) data released on Tuesday. But the resignations continued to be massive. Weekly jobless claims, an indicator of the level of layoffs, in turn began rising again in late July, hitting their highest four-week average since November. Jobless claims meanwhile hit a record low in March. Employers are hesitant to lay off workers due to severe labor shortages. In total, 1.4 million people received unemployment benefits in the United States in mid-July. In the same month last year they numbered 13 million. The central bank (Fed) raised its rates in order to fight against the rise in prices, which reached 9.1% annually in June, a record since 1981. As credit is more expensive, consumers buy less, companies reduce their level of investment and the pressure on prices is relieved. But this voluntary slowdown in the economy could trigger a recession.