US jobs market recovery smashes expectations in July
The US jobs market rebound is defying expectations and surging at a much faster pace than first thought, according to fresh data published today.
The US economy added 943,000 jobs in July, helping to push down the unemployment rate 0.5 per cent to 5.4 per cent, the US Bureau of Labour Statistics said on Friday.
Economists had expected the US economy to add 870,000 jobs in July.
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Job creation was primarily driven by firms in the US services industry scrambling to hire staff amid a resurgence in demand following the rapid rollout of vaccines.
“Notable job gains occurred in leisure and hospitality, in local government education, and in professional and business services,” the Bureau said.
The number of unemployed workers in the US fell 782,000 to 8.7m over the last month, but is still higher than the 5.7m jobless Americans registered before the onset of the pandemic.
The high level of spare capacity in the US jobs market indicates the Federal Reserve is unlikely to change its ultra-accommodative monetary policy stance.
Neil Birrell, chief investment officer at Premier Miton, said: “Whilst all the data is good, it is probably not good enough to change the Fed’s view on tapering for now, although it is very much on the agenda for later this year.”
The labour force participation rate, a measure of whether people are actively engaged with work or trying to source work, was steady at 61.7 per cent.
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Employers, particularly in the hospitality sector, have struggled to fill roles amid greater worker reticence to engage with the labour market. Reluctance in being primarily driven by concerns that jobs may not be viable in the long term, lack of child care and concerns about contracting a deadlier strain of Covid.
James Knightley, chief international economist at ING, said: “With companies desperate to recruit and expand to take advantage of the reopening and the stimulus-fuelled growth environment, companies are increasingly taking the decision to pay more to attract staff.”