The unemployment rate in the United States fell to a pre-pandemic low of 3.5 percent in July, offering the strongest evidence yet that the economy was not in a recession. U.S. firms employed significantly more people than anticipated.

The Labor Department said on Friday that nonfarm payrolls rose by 528,000 last month, according to the closely followed employment report. There were 398,000 new jobs generated in June as opposed to the previously reported 372,000, according to updated data.

That month’s payroll growth made it 19 months in a row. In June, the jobless rate was 3.6 percent.

According to Reuters’ poll of economists, payrolls would increase by 250,000 jobs, while the unemployment rate would remain unchanged at 3.6 percent. The range of estimates was between 75,000 and 325,000 jobs.

Despite consecutive quarters of declining gross domestic product, the employment data showed a generally healthy economy stumbling. Although the need for labour has decreased in interest rate-sensitive industries like housing and retail, airlines and eateries are still having trouble filling open positions.

Although much would depend on inflation readings, strong job growth might sustain pressure on the Federal Reserve to announce a third 75 basis point interest rate increase at its next meeting in September. The American central bank last week increased its benchmark interest rate by 0.75%. Since March, it has increased that rate by 225 basis points.

In the first half, the GDP shrank by 1.3 percent, partly as a result of sharp fluctuations in inventories and a trade imbalance linked to clogged global supply networks. Even yet, the pace is fading.

A recession is defined as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators” by the National Bureau of Economic Research, the official arbiter of recessions in the United States.

The labour market remains tight with 10.7 million job opportunities at the end of June and 1.8 openings for every unemployed person. Economists do not anticipate a major slowdown in payroll growth this year.

Following a 0.4 percent gain in June, the average hourly wage grew by 0.5 percent last month. That brought the year-over-year pay growth to 5.2 percent. Even if wage growth seems to have peaked, there are still pressures. According to data released last week, the second quarter’s annual pay rise was the fastest since 2001.

Aryan Jakhar

Aryan Jakhar works as an Editor-in-Chief at The Shining Media. Also, he is an editor at YouthPolitician (digital media situated in Taiwan). He writes his opinions on social issues at YouthKiAwaaz and also on his blogger website.

By Aryan Jakhar

Aryan Jakhar works as an Editor-in-Chief at The Shining Media. Also, he is an editor at YouthPolitician (digital media situated in Taiwan). He writes his opinions on social issues at YouthKiAwaaz and also on his blogger website.

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