The labor market in the United States showed unexpected dynamism in July, returning to its pre-pandemic level at a time when the fight against inflation raises fears of a recession, good news for Joe Biden a few months before crucial elections. mid-term.
There are now “more people working in the United States than before the start of the pandemic”, and even “than at any time in American history”, greeted the American president from the House -White.
The country regained the 22 million jobs that had been destroyed with the pandemic, and the unemployment rate fell back to 3.5%, as in February 2020. The labor market was then in the best shape in 50 years. .
The health of employment is currently being scrutinized very closely in the United States. If this rebound confirms the idea that the first economy in the world is not in recession, it is however bad news for inflation.
“Strong consumer spending continued to drive strong labor demand and support the job market,” Julia Pollak, chief economist for ZipRecruiter, said in a blog post.
“This remains one of the strongest job markets in 50 years, no comfort for those hoping for a slowdown that would reduce inflation,” said Mike Fratantoni, chief economist for the Real Estate Bankers Association ( Mortgage Bankers Association).
In July, twice as many jobs as expected were created (528,000 hires), the Labor Department announced on Friday, in all sectors, including leisure and hospitality, professional and business services and health care. health.
In addition, job creations for May and June have been revised upwards to 386,000 and 398,000 respectively, which represents 28,000 more jobs than announced.
However, this is not expected to last, as “labour demand is expected (…) to moderate in the second half of 2022, businesses will face higher costs, reduced consumer demand and a lower profitability,” according to Kathy Bostjancic, economists for Oxford Economics.
In the meantime, competition remains fierce between employers, who seek to attract too few workers.
Consequently, wages continue to rise. The average hourly wage in the private sector is now $32.27, 5.2% higher than a year ago.
However, this is not enough to offset inflation, which in June reached 9.1% over one year.
Joe Biden assured that he understood the difficulties of families who have “a job and (face) the rising prices of food, gasoline and many others”. He pressed the Senate to pass his grand health and climate investment plan.
The central bank (Fed) is maneuvering to try to cool the overheating of the economy, and, for this, raises its rates to make credit more expensive, and therefore encourage consumers to spend less.
These figures should weigh heavily in the balance at its next monetary meeting, at the end of September, and convince its officials to strike hard. They could raise rates again by three-quarters of a percentage point, as in June and then in July – the likes of which have not been seen since 1994, and a far cry from the usual quarter-point.
“It’s nice 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,” commented Harvard economics professor Jason Furman. and former White House economic adviser under Barack Obama.
The New York Stock Exchange was thus moving in the red on Friday, fearing an even stricter attitude from the Fed.
The first signs of a slowdown in employment had nevertheless emerged.
The number of job vacancies fell in June, falling to a nine-month low, but resignations remained massive, according to data from the Bureau of Statistics (BLS) released on Tuesday.
As for weekly jobless claims, which give an indication of the level of layoffs, they started to rise again at the end of July. The four-week average even reached its highest level since November.