The Jobs Report – July 2022

Highlight

The July employment report showed the economy added 528K jobs, easily beating the consensus forecast of 250K. The prior months were revised up by 28K.

What you need to know:

1. The 3-month average jumped to 437K from last month’s 384K, reversing the declining trend of the past several months.
2. Job gains were widespread across all sectors. Education and Health Services led with 122k jobs added followed by Leisure and Hospitality adding 96K.
3. The household survey was less robust with 179K jobs added in June. This survey has been mixed, vacillating between job growth and job losses, in the past several months. The unemployment rate dropped to 3.5% from 3.6% in June. This matches its pre-pandemic low. 
4. The surge in hiring pushed y-o-y hourly earnings to 5.2%, up 0.1% from June. As in prior months, this increase is less than the increase in consumer prices. Despite the strong labor market, workers wages are not keeping up with inflation.
5. In our view, this jobs report is good news for economic growth as we enter Q3.  It counters some of the weaker economic reports of late, especially the initial Q2 negative GDP report. Despite some recent softer data, the Fed has reiterated its commitment to fighting inflation. This report will likely give it good reason to keep hiking interest rates into the fall.