Labor Market Still Very Strong – Despite Fed’s Efforts to Cool

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The US labor market remained very strong in July. Payroll jobs rose by 528,000, and increases were widespread across sectors of the economy – in both highly skilled (professional services up 89,000) and less-skilled (Leisure/Hospitality up 96,000) jobs.

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The household survey also showed declining unemployment from 3.6 to 3.5%, and a modest rise in total employment (up 179,000).

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Economists had noticed a bit of cooling in other labor market data earlier this week – as the job vacancy rate declined to 6.6% and new Unemployment Insurance claims rose. Employers were apparently able to fill a larger fraction of their open jobs, and the numbers of involuntary job losers rose just a bit. But the overall strength of the labor market outweighs these modest signs of slowing.

As inflation remains high, the Federal Reserve will no doubt want the labor market to cool a good deal more than it has, and will likely keep raising interest rates at a brisk clip. Whether it can “thread the needle” – inducing a slowdown by enough to cool wage and price growth without causing a major recession – remains to be seen.

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Credit: www.forbes.com /

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