U.S. job growth exceeds estimates, and the unemployment rate drops by 3.5%.

Synopsis

The Labor Department said on Friday that nonfarm payrolls rose by 528,000 last month, according to the closely followed employment report. There were 398,000 new jobs generated in June as opposed to the previously reported 372,000, according to updated data.

The unemployment rate in the United States fell to a pre-pandemic low of 3.5 percent in July, offering the strongest evidence yet that the economy was not in a recession. U.S. firms employed significantly more people than anticipated. The Labor Department said on Friday that nonfarm payrolls rose by 528,000 last month, according to the closely followed employment report. There were 398,000 new jobs generated in June as opposed to the previously reported 372,000, according to updated data. That month’s payroll growth made it 19 months in a row. In June, the jobless rate was 3.6 percent. Payroll rise in that month made it a continuous 19 months. The unemployment rate was 3.6% in June.

Despite consecutive quarters of declining gross domestic product, the employment data showed a generally healthy economy stumbling. Although the need for labour has decreased in interest rate-sensitive industries like housing and retail, airlines and eateries are still having trouble filling open positions. Although much would depend on inflation readings, strong job growth might sustain pressure on the Federal Reserve to announce a third 75 basis point interest rate increase at its next meeting in September. The American central bank last week increased its benchmark interest rate by 0.75%. Since March, it has increased that rate by 225 basis points. In the first half, the GDP shrank by 1.3 percent, partly as a result of sharp fluctuations in inventories and a trade imbalance linked to clogged global supply networks. Even yet, the pace is fading. A recession is defined as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators” by the National Bureau of Economic Research, the official arbiter of recessions in the United States.

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