The US economy unexpectedly added 528,000 jobs last month, as payroll growth soared even in the face of tighter monetary policy and waning fiscal support, easing fears of a recession.
The data, which showed the unemployment rate edging down to 3.5 per cent from 3.6 per cent, showed an acceleration in the pace of job creation compared with June, when the economy added 398,000 jobs. Economists had expected job growth to slow to 250,000 last month.
The data were released by the US labour department at 8.30am eastern time on Friday, and will allay concerns of a downturn in the world’s largest economy just months before midterm elections that will determine control of Congress.
Gross domestic product data released last week showed the second consecutive quarterly contraction in output in the US. Economists at the National Bureau of Economic Research — the arbiters of what constitutes a recession in the US — have not said whether a recession is under way, but any big slump in job creation may exacerbate those concerns.
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Senior Biden administration officials have dismissed worries that the US is already in a recession, saying the economy remains in good shape and is simply in transition to a slower footing after the boom it experienced last year.
Jay Powell, the Federal Reserve chair, has cautioned against reading too much into the GDP figures and noted that he still thought interest rates could rise further without triggering a painful slump, but has warned that the path to reaching that outcome was getting “narrower”.
On Thursday, the US labour department separately released data showing that the number of people applying for unemployment benefits last week reached 260,000, its highest level in more than six months, raising additional alarm bells about the direction of the jobs market.
“We’re not in a recession right now. Are the risks of recession going up? Yes,” Loretta Mester, president of the Cleveland Fed, said at an event in Pittsburgh on Thursday.
She said she expected interest rates in the US would need to rise to “a bit above four [per cent]” to tame inflation. – Copyright The Financial Times Limited 2022
