The U.S. labor market remained red-hot in July despite expectations job growth would cool as tighter monetary conditions and company layoffs stoked fears of a recession.
The Labor Department released its latest monthly jobs report at 8:30 a.m. ET on Friday. Here were the key numbers from the report, compared to economist estimates compiled by Bloomberg:
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Non-farm payrolls: +528,000 vs. +250,000
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Unemployment rate: 3.5% vs. 3.6%
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Average hourly earnings, month-over-month: +0.5% vs. +0.4%
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Average hourly earnings, year-over-year: +5.2% vs. +4.9%
July's report marked a sharp jump from the prior month, which saw payrolls rise by 398,000. June's figure was upwardly revised from the 372,000 initially reported.
The unemployment rate ticked back down to 3.5% in July, matching the level seen in February 2020, just before the coronavirus pandemic upended the U.S. and global economies.
According to the Bureau of Labor Statistics, total nonfarm employment has increased by 22 million from its low in April 2020 and has fully recovered to return to its pre-pandemic level. In February 2020, the last month before the COVID-19 pandemic,152.504 million in the U.S. were employed. As of July 2022, 152.536 million people in the U.S. were working.
The labor force participation edged marginally lower last month, falling to 62.1% from 62.2% in June. Meanwhile, average hourly earnings increased 0.5% for the month, higher than June’s upwardly revised monthly wage gains of 0.4%. On an annual basis, earnings were up 5.2%, on par with June's year-over year increase.
"The July employment report was an absolute knock-out, a major upside surprise relative to my expectations and indeed much of the labor market data released up to this point," Renaissance Macro Research Head of U.S. Economics Neil Dutta said in a note. "Talk of recession and a monetary policy pivot is premature."
"That said, this jobs report is consistent with an inflationary boom," Dutta added. "The Fed has a lot more work to do and in an odd way, that the Fed needs to get more aggressive in pushing up rates, makes the hard-landing scenario more likely."
At the industry level, services-based employers continued to lead gains in July as companies rushed to hire back workers laid off during the pandemic, with a return to in-person activities driving consumer demand. Employment in the leisure and hospitality industry jumped by 96,000 jobs last month, compared to an increase of 67,000 jobs in June.
Despite gains in the sector, which was among those hardest hit by COVID-related lockdowns, employment in leisure and hospitality remains at 1.2 million, or 7.1% below pre-pandemic figures.