US jobs growth expected to slow as labour demand cools
US job growth is expected to have slowed down last month on the latest signs of declining demand in the labor market due to high inflation, tighter monetary policy and dwindling fiscal support.
According to economists polled by Bloomberg, nonfarm payrolls will rise 250,000 in July, compared to 372,000 in June, while the unemployment rate remains stable at 3.6 percent.
The data will be released Friday at 8:30 a.m. Eastern time by the US Labor Department amid concerns about a downturn in the world’s largest economy just months before the midterm elections that will determine control of Congress.
Gross domestic product data released last week showed the second consecutive quarter of production contraction in the US. Economists at the National Bureau of Economic Research — the arbiters of what constitutes a recession in the US — haven’t said whether a recession is underway, but a major slump in job creation could exacerbate those concerns.
Senior Biden officials have dismissed concerns that the US is already in recession, saying the economy remains in good shape and is simply in transition after the boom it experienced last year.
Jay Powell, the chairman of the Federal Reserve, has warned not to read too much into GDP figures, noting that he still believed interest rates could rise further without triggering a painful slump, but has warned that the road to achieve that result became “closer”. .
On Thursday, the US Labor Department released separate data showing that the number of people claiming unemployment benefits last week reached 260,000, the highest level in more than six months, raising additional alarm bells about the direction of the job market.
“We are not currently in a recession. Are the risks of a recession rising? Yes,” Loretta Mester, president of the Cleveland Fed, said at an event in Pittsburgh on Thursday. She said she expected US interest rates to rise to ‘slightly above four’ [per cent]to tame inflation.