There's been a lot of talk about recession lately, but all the bad vibes are doing little to slow job growth. The latest numbers from the Bureau of Labor Statistics show that the U.S. added 528,000 jobs in July, and the unemployment rate fell to 3.5 percent.
This is well above estimates that the U.S. would add just 250,000 jobs last month, as many economists misjudged how much the economy would slow due to the Federal Reserve's aggressive rate hikes, which have been pitched explicitly as a way to curb wage and employment growth and ultimately bring down inflation.
But the central bank's strategy doesn't appear to be working -- at least not yet. With unemployment at 3.5 percent and the total number of unemployed down to 5.7 million, the U.S. job market has returned to the 50-year high it reached just prior to the pandemic.
In addition, the number of long-term employed dropped 269,000 to 1.1 million, which is lower than in February 2020, and the number of permanent job losers trended down to 1.2 million. Meanwhile, the average hourly wage was $32.27 per hour, up 15 cents from June. Wages were up 5.2 percent from a year ago, which is still well below the current year-over-year inflation rate of 9.1 percent.
The bullish reading comes amid a slew of headlines showing major firms such as Walmart and Amazon making layoffs. There was also an uptick on Thursday in weekly jobless claims, and a recent report showing two consecutive quarters of decline in gross domestic product.
"Given the recent rise in jobless claims (the highest since November) and announced layoffs (especially from firms like Amazon and Walmart), plus the recent drop in job openings, it felt like that today’s expected number of 250k was going to be too high," wrote Rusty Vanneman, chief investment strategist at Orion Advisor Solutions, in an email.
The gains were felt across the economy, with health care (adding 70,000 jobs), leisure and hospitality (96,000), and professional and business services (89,000) leading the pack.
However, there is one area where slowing economic activity appears to be impacting jobs. The number of workers employed part time for economic reasons jumped 303,000 to 3.9 million, which BLS said reflects hours being cut due to "slack work or business conditions."
The increase in part-time work comes on the heels of several earnings reports showing a resurgence in the gig economy. Uber reported record revenue in the last quarter, and DoorDash said orders grew 23 percent year-over-year to an all-time high of 426 million.
One concern voiced by economists is that the higher-than-expected job gains don't leave much room for the Federal Reserve to moderate its planned rate hikes, which isn't good news for the stock market. The Dow dropped 200 points Friday morning after the blockbuster report.