WASHINGTON: US employers hired the most workers in nearly a year in July and continued to raise wages, giving the economy a powerful boost as it started the second half of what many economists believe will be the best year for growth in almost four decades.
The Labour Department’s closely watched employment report on Friday also showed the unemployment rate dropped to a 16-month low of 5.4 per cent and more people waded back into the labour force. The report followed on the heels of news last week that the economy fully recovered in the second quarter the sharp loss in output suffered during the very brief pandemic recession.
“We are charting new economic expansion territory in the third quarter,” said Brian Bethune, professor of practice at Boston College in Boston. “The overall momentum of the recovery continues to build.” Nonfarm payrolls increased by 943,000 jobs last month, the largest gain since August 2020, the survey of establishments showed. Data for May and June were revised to show 119,000 more jobs created than previously reported. Economists had forecast payrolls would increase by 870,000 jobs.
More than 4 million jobs created since we took office. It’s historic — and proof our economic plan is working
JOE BIDEN
US President
The economy has created 4.3 million jobs this year, leaving employment 5.7 million jobs below its peak in February 2020.
President Joe Biden cheered the strong employment report. “More than 4 million jobs created since we took office,” Biden wrote on Twitter. “It’s historic — and proof our economic plan is working.” Hiring is being fueled by pent-up demand for workers in the labour-intensive services sector. Nearly $6 trillion in pandemic relief money from the government and Covid-19 vaccinations are driving domestic demand.
But a resurgence in infections, driven by the Delta variant of the coronavirus, could discourage some unemployed people from returning to the labour force.
July’s employment report could bring the Federal Reserve a step closer to announcing plans to start scaling back its monthly bond-buying program. The US central bank last year slashed its benchmark overnight interest rate to near zero and is pumping money into the economy through the bond purchases. —Reuters
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