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U.S. Job Growth Continues Despite Economic Slowdown

The U.S. economy continues to experience strong employment growth despite signs of an economic slowdown and the Federal Reserve’s efforts to control inflation. According to the Labor Department’s latest report, American employers added 187,000 jobs in July, marking 31 consecutive months of growth. The unemployment rate also dropped to 3.5 percent, near its record low.

Although revised figures show a slight deceleration in job gains compared to the previous months, the report indicates that most individuals seeking employment are able to find jobs, which is putting upward pressure on wages. Average hourly earnings increased by 4.4 percent from the previous year, giving workers more spending power despite rising prices.

Economists believe that this trend indicates a progression towards a more sustainable pace of growth. Lydia Boussour, a senior economist at the consulting firm EY-Parthenon, explains that the labor market is rebalancing gradually, which explains why there is still some tightness despite the ongoing job growth.

Despite concerns about an economic downturn, overall economic growth remains robust, and it appears less likely that a significant downturn will occur. Many Wall Street banks and the Fed’s staff economists have revised their recession forecasts for this year, betting that inflation will normalize without causing extensive damage to workers and businesses.

The employment growth is primarily concentrated in the healthcare sector, which added 63,000 jobs in July. Other sectors, such as leisure and hospitality, manufacturing, and transportation and warehousing, have experienced limited or negative growth. However, layoffs remain low, indicating that companies are not drastically cutting payrolls despite the economic slowdown.

Stephen Bullock, the president of Power Curbers, a construction equipment manufacturer in North Carolina, acknowledges that business has slowed down since the building boom of 2021. However, he is not considering laying off any employees and believes in finding other ways to keep them occupied and productive during the slowdown.

Despite potential risks and challenges in the coming months, such as the resumption of student loan payments, vacant commercial office buildings, and loan defaults, forecasters expect modest monthly job increases or even declines towards the end of 2023. This is expected to bring inflation back to the Federal Reserve’s target rate of 2 percent. However, for now, most workers remain optimistic about finding new job opportunities and are able to be selective in their choices.

Overall, despite an economic slowdown, the U.S. job market continues to demonstrate resilience and sustained growth, providing opportunities for workers and supporting wage increases.

Jeanna Smialek and Ben Casselman contributed reporting.

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