USA: Unemployment rate reaches pre-corona level despite inflation and fears of recession

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Construction workers (in Boston): More than twice as many new jobs as expected

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ALLISON DINNER / REUTERS

The US labor market developed strongly last July and thus gave no indication of a feared recession.

Employment rose more than twice as fast as expected, unemployment reached pre-corona levels and wages rose more strongly again.

Nonfarm payrolls rose by 528,000 jobs in July, according to the US Department of Labor.

That's more than double the 250,000 new jobs analysts were expecting.

In addition, the job numbers for the two previous months were subsequently corrected upwards.

Meanwhile, the unemployment rate fell from 3.6 to 3.5 percent.

According to the ministry, about 5.7 million people were unemployed.

Both values ​​would correspond to the pre-corona level of February 2020, the authority said.

In January and February 2020, the unemployment rate in the US had already reached 3.5 percent, the lowest level in around 50 years before millions of people lost their jobs due to the corona pandemic.

In April 2020, the rate skyrocketed to 14.7 percent - the highest level since the global economic crisis of the 1930s.

The US economy was later able to recover from the effects of the pandemic, and unemployment figures gradually fell.

Wages grow strongly – inflation stronger

According to the latest figures, wage growth is accelerating again somewhat.

Average hourly wages rose 0.5 percent month-on-month, after 0.4 percent in June.

As in June, hourly wages increased by 5.2 percent over the year.

Many US companies have been complaining about a labor shortage for a long time, which is why wages are increasing significantly.

However, they lag behind the even higher inflation rate of 9.1 percent.

After the US economy shrank in the first half of the year, it was debated whether one could speak of a real recession given the robust condition of the labor market.

The current data seem to deny that: The labor market report was very strong and speaks for further significant interest rate hikes by the US Federal Reserve, noted expert Michael Pearce from the analysis house Capital Economics.

The development leads the debate about a strong economic downturn ad absurdum.

sol/dpa/AFP