U.S. Economy Adds a Shocking 528,000 Jobs in July
The economy added a shocking 528,000 jobs in July, more than double economists’ expectations of around 250,000. With July’s big job gains, the U.S. has recovered all jobs lost to the pandemic. Despite recession fears, the labor market is as competitive as ever.
July’s impressive growth is more than two times the pre-pandemic average, where 200,000 jobs added would be a solid number. With unemployment rates now at pre-pandemic lows and nearly two job openings for every unemployed person, U.S. businesses need to focus on retaining talent.
July’s incredible job gains are a sign that the labor market is not cooling off yet, despite talk of a recession. In addition to recovering all jobs lost to the pandemic, this month’s job gains bring the total for 2022 to nearly 3.3 million, an average of 471,000 jobs added per month.
The labor market remains tight and the competition for talent is fierce. Job openings – a key indicator of labor demand – hires, quits and layoffs are reported on a lag. And June’s job openings released earlier this week, showed that job openings fell by around 600,000 from May to 10.7 million. Lower job openings in June have clearly not slowed the pace of job gains.
Because of this labor market competition, wages increased more than expected in July – bad news for inflation but good news for workers feeling the crunch from inflation. Wages went up by 0.5% (about 15 cents per hour) in July; and over the past 12 months wages have increased by 5.2%, up from 5.1% last month.
The unemployment rate ticked down to 3.5% in July – matching the pre-pandemic low. With 10.7 million job openings but only 5.7 million unemployed workers available to fill those open roles, there are nearly two open jobs for each unemployed worker.
One challenge in this month’s report, contributing to the talent shortage businesses face, is the decline in labor force participation (or the the total number of people who are employed or unemployed and looking for work). The labor force declined by 63,000 in July. Overall, there are still 623,000 fewer people in the labor force than before the pandemic.
Despite Uncertainty, 2022 Hiring Hasn’t Slowed
The economy lost 22 million jobs in the early months of the pandemic, and with July’s huge gains we’ve reached the major milestone of recovering all jobs lost.
While there are broader economic challenges, 2022 is still poised to be a strong year for hiring. The tight labor market and turnover are likely to subside somewhat but remain elevated in 2022 – LaborIQ® projects 230M total job openings, hires and quits in 2022.
A slower pace of job gains is inevitable given unprecedented growth over the past year-and-a-half and a labor force that keeps getting smaller. Especially now that we’ve reached pre-pandemic employment levels, monthly job gains are likely to moderate. The silver lining here for businesses is that record turnover – which has been driving the Great Resignation – will likely start to subside, giving human resources and talent acquisition more time to focus on the day-to-day.
Even with expectations of an economic slowdown, the labor market is likely to remain tight. Labor demand remains high, and the talent pool is not getting bigger.