Despite the U.S. being in a technical recession, the country has added 528,000 jobs, with the unemployment rate falling to 3.5 percent in July, data from the Department of Labor shows.
The 528,000 jobs added in July are more than double the 250,000 jobs economists predicted, with the unemployment rate surpassing expectations by a 0.1 percentage point.
The 3.5 percent unemployment rate returns the jobless rate to pre-pandemic levels, a figure it reached in February 2020, which broke a 50-year unemployment record.
These figures are most impressive as they come at a time of consumer confidence plunging and gross domestic product shrinking.
The data also throws the narrative of the U.S. being on the brink of a recession into question. This could also give the Federal Reserve more room to increase interest rates without fearing it will trigger drastic job losses.
In an analysis published on Friday, Morning Consult chief economist John Leer called those saying the economy was in a recession “wrong,” pointing to “Demand for workers skyrocketed in July, far exceeding expectations. Paired with falling gas prices, the economic outlook for the third quarter starts looking better.”
Leer added, “Today’s [August 5] numbers also increase the likelihood of more aggressive rate hikes by the Fed as it tries to tame inflation, and downside risks remain elevated later in the year.”
The figures show the leisure and hospitality industry leading the job growth adding 96,000 jobs, and restaurants and bars adding 74,000 jobs.
Professional and business services added 89,000 jobs, health care 70,000, and government 57,000, all of which helped those sectors recover jobs lost during the COVID-19 pandemic.