Companies are doing much better than expected, ringing in a strong July job report.
The U.S. economy added a robust 528,000 jobs in July, recouping the number of payrolls lost in the wake of the pandemic, the Bureau of Labor Statistics reported this morning. The unemployment rate also dropped to 3.5%, a half-century low also seen just before the pandemic in early 2020.
The labor-force participation rate, people working or seeking a job, fell to 62.1% in July from 62.2% the previous month.
Some companies such as Walmart and Robinhood Markets Inc. are cutting staff, but overall layoffs are slowly rising, according to weekly unemployment claims.
“Companies used to reach for layoffs as the first option,” says chief economist for consulting firm EY-Parthenon Greg Daco. “Now we’re seeing slower hiring as option number one, followed by targeted hiring freezes, followed by targeted layoffs, followed by broader layoffs.”
U.S. job openings remained elevated but fell in June to their lowest level in nine months and fell by 600,000 from May, according to a report from the Labor Department released Tuesday. Total job openings remained well above the number of unemployed workers looking for a job.
Despite the cooling in the labor market, some economists expect more people to look for work as inflation weighs on household budgets.
Rapidly rising prices is the main reason older workers are unretiring, according to a survey by the jobs site ZipRecruiter. In the firm’s June survey, among the 21.5% of current job seekers who say that they previously retired at some point, 35.8% ranked inflation as the top reason that they have returned to the job market. Another 26.2% said that they are rejoining the workforce because they are running out of retirement savings.
Federal Reserve officials are hopeful they can bring down the highest inflation in four decades without causing a major increase in unemployment. Fed Chairman Jerome Powell told reporters recently that the number of job openings could fall significantly without a big rise in unemployment.