US jobs hit pre-pandemic level despite fears over recession

THE number of workers in the United States has finally returned to pre-pandemic levels as America’s red-hot labour market avoids damage from an economic downturn.

The US added 528,000 jobs during July, the most in five months, with June’s gains also revised higher, despite surprise figures that show it has entered a technical recession.

There were 153m non-farm payroll jobs registered in total, versus 152m in Feb 2020 before the pandemic struck.

Unemployment stood at a five-decade low of 3.5pc during the month, while average earnings picked up more than expected.

Stephen Juneau, an economist at Bank of America, said the increase was far higher than expected.

He said: “The report throws cold water on a significant cooling in labour demand, but it’s a good sign for the broader US economy and workers.”

The figures are the latest sign of surging demand for workers in the wake of the pandemic, particularly within the country’s services sector.

It is a boost for President Joe Biden, who has argued that the country is not suffering a real downturn despite reporting two quarters of consecutive falls in economic output that indicate it is in a technical recession.

The report will strengthen the resolve of the Federal Reserve to press ahead with further rapid interest rate increases as it tries to curb inflation.

In a sign of building inflationary pressures, hourly earnings remained elevated, rising 0.5pc across the month to stand 5.2pc higher year on year.

Diane Swonk, chief economist at KPMG US, said: “This ups the pressure on the Federal Reserve to raise rates aggressively again in September.”

Job gains were broadly based, with increases across a variety of sectors, according to the Bureau of Labour Statistics.

Education and healthcare, leisure, hospitality and professional business services were the strongest performing sectors.

Lydia Boussour, lead US economist at Oxford Economics, said labour market momentum was still likely to cool despite yet another expect-beating month.

She said: “Despite the strong employment readings, we believe that labour demand should resume its moderating trend through [the second half of the year] as companies face higher costs, reduced consumer demand and lower profitability.

“This should help bring worker demand and supply closer into balance.”

153m

Workers registered in non-farm jobs – up 528,000 in July and surpassing the total recorded in Feb 2020