US economic growth slowed sharply in July amid record-high interest rates, persistent inflation and growing financial stress on households. The unemployment rate rose to 4.3% from 4.1%, the highest level since October 2021.
The US labor market is cooling with 114,000 jobs added in July, the Bureau of Labor Statistics reported Friday. This figure is below the 179,000 jobs added in June and also below the consensus forecast of 170,000.
Hiring in the US slowed sharply in July, with employers adding just 114,000 jobs amid historically high interest rates, persistent inflation and growing financial stress on households.
The unemployment rate rose to 4.3% from 4.1%, the highest level since October 2021, the Labor Department reported Friday. Economists had estimated that 175,000 jobs had been created last month, according to a Bloomberg survey.
Wall Street: waiting for the data
The unexpected and sharp increase in the unemployment rate triggers the Sahm rule. This states that if unemployment, based on a three-month average, increases by at least half a percentage point over the past 12 months, the country is likely to be in recession..
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Although the rule has correctly predicted every US recession since the 1970s, many economists say this time is different. A surge in immigration, coupled with the return of many Americans to the labor market following the pandemic, caused unemployment to rise without the usual wave of layoffs, as many job seekers have not yet found positions.
Still, the rising unemployment rate underscores that the labor market is weakening and could eventually trigger a recession, says Sarah House, an economist at Wells Fargo.
A surge in immigration, while losing some momentum, is still adding about 50,000 workers a month to the labor supply and allowing employers to fill vacancies, according to Goldman. At the same time, it is driving up the unemployment rate because it can take time for recent immigrants to find work.
Source: Ambito
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