Friday, August 12, 2022

US jobs growth expected to slow as labour demand cools


US jobs growth is expected to have slowed last month in the latest sign of easing demand in the labour market owing to high inflation, tighter monetary policy and waning fiscal support.

According to economists surveyed by Bloomberg, non-farm payrolls will post an increase of 250,000 in July compared to 372,000 in June, while the unemployment rate will remain steady at 3.6 per cent.

The data will be released by the US labour department at 8.30am eastern time on Friday, amid concerns of a downturn in the world’s largest economy just months before midterm elections that will determine control of Congress.

Gross domestic product data released last week showed the second consecutive quarterly contraction in output in the US. Economists at the National Bureau of Economic Research — the arbiters of what constitutes a recession in the US — have not said whether a recession is under way, but any big slump in job creation may exacerbate those concerns.

Senior Biden administration officials have dismissed worries that the US is already in a recession, saying the economy remains in good shape and is simply in transition to a slower footing after the boom it experienced last year.

Jay Powell, the Federal Reserve chair, has cautioned against reading too much into the GDP figures and noted that he still thought interest rates could rise further without triggering a painful slump, but has warned that the path to reaching that outcome was getting “narrower”.

On Thursday, the US labour department separately released data showing that the number of people applying for unemployment benefits last week reached 260,000, its highest level in more than six months, raising additional alarm bells about the direction of the jobs market.

“We’re not in a recession right now. Are the risks of recession going up? Yes,” Loretta Mester, president of the Cleveland Fed, said at an event in Pittsburgh on Thursday. She said she expected interest rates in the US would need to rise to “a bit above four [per cent]” to tame inflation.

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