The unemployment rate in the U.S. rose to almost a three-year high of 4.3 percent in July as hiring saw a significant slowdown, raising fears that the labor market is deteriorating, potentially making the economy vulnerable to a recession.
The rise in the U.S. unemployment rate from 4.1 percent in June marked the fourth consecutive monthly increase, the Department of Labor reported.
Fed’s rate cut bets
The U.S. unemployment rate’s rise from a five-decade low of 3.4 percent in April 2023 to the highest level since September 2021 now raises bets for a September interest rate cut from the Federal Reserve. Economists are now calling for a 50 basis point reduction in interest rates, stating that the central bank is likely behind the curve in easing monetary policy. The Fed’s rate hikes in 2022 and 2023 have impacted demand for labor, with government data this week showing hires in June were the lowest in four years.
Nonfarm payrolls rise less than expected
Nonfarm payrolls increased by 114,000 jobs last month, the Department of Labor’s Bureau of Labor Statistics said. That is significantly below the 215,000 jobs per month added in the last 12 months, and lower than economists say are needed to keep up with growth in the population, accounting for the recent surge in immigration.
The bureau said that Hurricane Beryl which happened in Texas during that time had no impact on the data. However, the survey reveals that 436,000 people reported that they could not report to work because of bad weather last month, the highest on record for July. In addition, there were 249,000 people on temporary layoff last month.
The report also reveals that the average workweek fell to 34.2 hours from 34.3 hours in June, also suggesting that the hurricane had some impact on the labor market. However, construction payrolls increased as did leisure and hospitality employment.
Read: U.S. weekly jobless claims rise to 11-month high spurring labor market concerns
Wage growth slows
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