Economic Forecasts

Jobs: Surprisingly Strong Growth, Still Hints of Future Softness

Kiplinger’s latest forecast on jobs

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A surprisingly high number of 528,000 jobs were added in July. This was a step up from the previous four months. The economy continues to recover jobs lost during the pandemic, such as at restaurants and airlines. Hiring was robust across industries. The unemployment rate dipped down to 3.5%.

Wage growth was still brisk, with hourly earnings up 5.2% across the economy, and 6.2% among non-supervisory workers. Wage growth has eased a little since peaking earlier this year, but not by much. It will likely stay high as long as the unemployment rate stays this low.

Strong jobs and wage growth will likely keep the Federal Reserve on its current path of interest rate hikes. It is expected to raise by a half-percentage point at its Sept. 21 meeting.

However, there was a hint of softness in the jobs report that points to some weakness later this fall. The strong household employment growth trend has stopped, as household employment has averaged a decline over the past four months. Household employment surveys include more of the informal sector of the labor market than payroll employment data does, and may indicate weakness on the edges of the economy that could show up later as less company hiring.

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