The U.S. economy added 528,000 jobs in July, more than double the number economists had expected.
This staggering increase in employment completes a milestone for the U.S. economy: Pre-pandemic employment is now fully restored.
In February 2020, the last month before the COVID-19 pandemic tipped the U.S. economy into recession, there were 152.504 million people employed in the U.S.
As of July 2022, 152.536 million people in the U.S. were working.
And despite the labor market contraction during the pandemic being the sharpest in modern history, the bounce back marks the second-fastest job market recovery since 1981.
In a little over two years, we’ve seen job losses that topped 20 million at one point be fully erased.
This recovery stands in stark contrast to the malaise we saw in the labor market following the financial crisis, when it took the better part of a decade for pre-crisis employment levels to be restored.
The full recovery in the labor market also comes amid fears of recession as the Federal Reserve aggressively raises interest rates to tamp down inflation, which continues to run at 40-year highs.
Most economists had expected Friday’s jobs report would show a moderation in hiring, especially as some labor market indicators have pointed to a slowdown. High-profile cuts from the tech sector have also been seen by many as a proverbial canary in the coal mine for the broader economy.
“The unexpected acceleration in non-farm payroll growth in July, together with the further decline in the unemployment rate and the renewed pick-up in wage pressure, make a mockery of claims that the economy is on the brink of recession,” Michael Pearce, senior U.S. economist at Capital Economics, wrote in a note following Friday’s report.
In Pearce’s view, this report also makes it likely the Fed raises interest rates by 0.75% at its September meeting. This would mark the third-straight meeting the central bank raised rates by this magnitude.
“The July employment report was an absolute knock-out, a major upside surprise relative to my expectations and indeed much of the labor market data released up to this point,” Neil Dutta, head of economics at Renaissance Macro, stated in an email. “That said, this jobs report is consistent with an inflationary boom. The Fed has a lot more work to do and in an odd way, that the Fed needs to get more aggressive in pushing up rates, makes the hard-landing scenario more likely.”