The US added 528,000 jobs and the unemployment rate fell to 3.5 in July, according to data released Friday by the Labor Department, a stunning gain that defied predictions of a slowdown.
Economists expected the US to have added roughly 250,000 jobs in July and keep the jobless rate at 3.6 percent, according to consensus estimates released before the report.
But the economy added more than double the number of jobs experts predicted, even as consumer confidence plunged and gross domestic product shrank over the first half of the year. The jobless rate also returned last month to its pre-pandemic level of 3.5 percent, which in February 2020 set a 50-year low for unemployment.
The stunning July jobs gain will raise questions about how close the US economy actually is to a recession after months of growing concern over a sharp slowdown. The resilience of the labor market also means the Federal Reserve may have more room—or at least feel more pressure—to rapidly raise interest rates and fight inflation without fears of triggering steep job losses.
“If you thought the economy was in a recession, you were wrong. Demand for workers skyrocketed in July, far exceeding expectations. Paired with falling gas prices, the economic outlook for the third quarter starts looking better,” wrote John Leer, chief economist at Morning Consult, in a Friday analysis.
“Today’s numbers also increase the likelihood of more aggressive rate hikes by the Fed as it tries to tame inflation, and downside risks remain elevated later in the year.”
Updated at 8:53 am