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In a sign of continued strength in the U.S. labor market, employers added 528,000 jobs to the economy in July, as reported by the Bureau of Labor Statistics (BLS) in its latest nonfarm payrolls report. Payroll growth came in more than double analysts’ expectations of 250,000.
With last month’s gains, the labor market surpassed its previous peak of 152.5 million payrolls set in February 2020, effectively recovering losses incurred during the pandemic recession. Meanwhile, the unemployment rate unexpectedly fell to 3.5%, matching the pre-pandemic rate of January and February 2020, its lowest rate since 1969.
Key Takeaways
- The U.S. economy added 528,000 jobs in July, more than double projections of a 250,000 gain
- The labor market has fully recovered all job losses incurred during the onset of the COVID-19 pandemic
- The unemployment rate declined to 3.5%, matching the pre-pandemic rate of January and February 2020
- Job growth was broad-based across sectors and industries, led by gains in the leisure and hospitality, professional and business services, and healthcare sectors
- Nominal wages rose 0.5% in July, accelerating from a 0.4% gain in June, rising 5.2% from a year earlier
Broad-Based Gains Across Sectors
Payroll gains were broad-based across sectors and industries, with a particularly strong gain of 96,000 in the leisure and hospitality sector, led by continued growth in food services and drinking places with 74,000 roles. Professional and business services added 89,000 jobs, followed by health care with 69,600. Government employment is once again rising, recording a gain of 57,000 positions.
Since reaching a pandemic-era trough in April of 2020, nonfarm payrolls have risen by a cumulative 22 million over the past 27 months. Private sector payrolls are now 629,000 positions above their pre-pandemic peak in February 2020. Public sector, or government payrolls have yet to fully recover and are 597,000 positions below their pre-pandemic peak.
Labor Force Participation Inches Lower
The labor force participation rate, tracking the percentage of the adult population that is either employed or looking for work, edged down a tenth of a percentage point to 62.1%. Meanwhile, the employment-to-population ratio remained unchanged at 60%. Labor force participation remains considerably below its pre-pandemic level of 63.4% recorded in February 2020, as the onset of the pandemic caused large numbers of workers to permanently drop out of the labor force.
Nominal Wage Gains Accelerate
Nominal wages rose 0.5% in July—accelerating from a 0.4% gain in June—with the average hourly wage for private-sector workers rising to $32.27. Year-over-year, wages rose 5.2%, in line with the rate of increase in June. However, wage growth remained well below the annual inflation rate of 9.1%, indicating a decline in real wages and a further loss of consumer purchasing power.