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United States Unemployment July 2022

United States: Job gains exceed expectations in July

Total non-farm payrolls increased by 528,000 in July, up from June’s 398,000 figure and more than double market expectations. Employment gains were particularly strong in leisure and hospitality, professional and business services, and health care. Meanwhile, the unemployment rate fell to 3.5% in July. As a result, both employment and the unemployment rate have returned to their pre-pandemic levels. Finally, annual wage growth was unchanged at 5.2% year on year.

All in all, the data shows the labor market remained robust at the outset of Q3. Looking ahead, the Consensus is for the labor market to lose steam heading into 2023 as the economy slackens amid higher interest rates, with the unemployment rate forecast to move back above 4% next year.

TD Economics’ Thomas Feltmate said:

“While payrolls had been showing some signs of slowing in recent months, July data shows a complete reversal in that trend and flies in the face of other labor market metrics [However,] it’s important to emphasize that these gains are not sustainable. The participation rate has moved sideways this year (and even ticked lower in July), implying the lack of labor supply will soon be a binding constraint on hiring.”

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