5 key takeaways from the July jobs report

July’s jobs report was a stunner, in more ways than one. Despite raging inflation and anxiety about a possible recession, employers created 528,000 jobs last month, more than double market expectations. That’s the fastest pace of hiring since February.

While the monthly jobs report is always highly anticipated, the July report was even more closely watched by investors, policymakers and the public. There have been increasing signs that the U.S. economy is heading into a recession. The strong job market may diminish those fears for now. But with inflation stubbornly high, the Federal Reserve may need to take additional measures to slow down the economy.

Here are five takeaways from the July jobs report:

HIRING: ZERO SIGNS OF SLOWING

Economists and policymakers had expected hiring to slow in July due to recession worries, rising interest rates and high inflation, with forecasts of 250,000 jobs created versus 372,000 in June.

Not only did job creation blow past those expectations, but the pace of hiring was back to levels not seen since the beginning of the year. Unemployment is at a 50-year low, and wages grew by 0.5% last month. Further, the Labor Department revised its May and June reports to show stronger hiring in those months.

“The report throws cold water on a significant cooling in labor demand, but it’s a good sign for the broader U.S. economy and worker,” wrote Stephen Juneau, an economist with Bank of America Securities.

STEP ON THE BRAKES HARDER?

With July’s strong jobs report, the market now expects the Fed to apply more pressure on the economy in its effort to cool inflation.

Fed fund futures, which are securities that bet on which way the Fed will move interest rates, now show there’s a 70% chance the central bank will raise interest rates by 0.75 percentage points at its September meeting. Before the jobs report came out, that figure was 34%.

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“This remains one of the strongest job markets in the past 50 years, no comfort for those hoping for a slowdown which would reduce inflation and lead to a less aggressive path of rate hikes from the Federal Reserve,” said Mike Fratantoni, chief economist with the Mortgage Bankers Association, in an email.

The hope inside the Fed and on Wall Street is that the central bank can get inflation in check without causing a recession, in what’s known as a “soft landing” for the economy.

Investors get the next inflation reading on Wednesday. With the recent decline in gas prices, there are some hopes that the worst of the inflationary issues are in the rearview mirror. In June, consumer prices jumped 9.1% from a year earlier — the biggest increase since 1981.

JOBS CONTRAST OTHER ECONOMIC SIGNS

Without this blockbuster jobs report, most signs would point to the U.S. economy being in a recession or heading into one.

Last week the Commerce Department reported that the U.S. economy contracted for a second consecutive quarter, meeting the informal definition of a recession. The report showed Americans bought fewer …read more

Source:: Headlines News4jax

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