The US economy is the verge of a recession. It has seen two consecutive quarters of contraction, and inflation has now reached 9.1%, a forty-year high.
Despite these economic challenges, the US job market is booming, according to data from the Bureau of Labor Statistics.
Not only is the ‘Great Resignation’ showing no signs of letting up, for the first time since the pandemic began, the number of Americans employed returned to pre-COVID-19 levels.
In fact, private sector payroll in July 2022 was 629,000 higher than February 2020 figures, while government employment was 597,000 lower.
The July 2022 unemployment rate (3.5%) also returned to the lows of February 2020 when 5.7 million people were unemployed. This was below the 3.6% forecast.
In July 2022, the number of people on payroll increased by 528,000 (this is the largest average growth in four months, and much higher than analysts’ expectations of 250,000). Although the growth was widespread, gains were primarily seen in leisure and hospitality (96,000), professional services (89,000) and healthcare (70,000).
While professional services employment is now 986,000 higher than February 2020, employees in hospitality remain 1.2 million lower, and hospital employment was 78% below pre-COVID-19 levels.
Eloise Gould, Economic Policy Institute senior economist, tweeted:
Private sector employment is now 0.5% above pre-pandemic levels while state and local jobs remain stubbornly 3.0% below its February 2020 level with little improvement in recent months. pic.twitter.com/EX3t4eRVzg
— Elise Gould (@eliselgould) August 5, 2022
For July 2022, US labor participation rate was 62.1%, meaning it remained slightly below the pre-COVID-19 level of 63.4%.
The data from BLS also showed that average earnings increased 0.5% in July to $32.27 per hour. This means that, on average, Americans are earning 5.2% more than they were this time last year.
Talking to the New York Times, ING’s chief international economist James Knightley commented: ““At this stage, things are OK.
“Say, December or the early part of next year, that’s where we could see much softer numbers.”
What’s the labor situation in Europe?
Overall, as things stand, the job market in the US is looking strong. This begs the question: how does the situation in Europe compare?
Like the US, the UK is struggling with sky high inflation – in fact, earlier this week, the Bank of England had to raise interest rates to the highest rate since 1995 to try and curb the impact.
The bad news is the cost of living crisis is creating a situation where while pay is rising, real take-home wages (when adjusted for inflation) are falling at the fastest rate on record in the UK.
Things get more promising when you look at the state of the wider job market. Data from the Office for National Statistics (ONS) showed that the number of Brits in employment rose 0.1% between May and June 2022 – the rise was 3% on the previous year, meaning that like the US, the UK has also now returned to pre-COVID-19 levels of employment.
In addition, ONS data also showed potential redundancies for July 2022 were 45% lower than pre-COVID-19 figures. 28% fewer employers were also proposing redundancies in July.
France also saw the number of private payroll employment exceed pre-COVID-19 levels in June 2022.
According to data from Insee, in the second quarter of 2022 (March to June), French employment grew by 0.5% (or 102,500). This is on top of 0.3% growth in the first quarter, and is the sixth quarterly increase in a row, according to Le Monde.
If you combine this data with the 4.3% increase (or 828,700) for 2021, the losses in 2020 (256,500) are more than offset.
Insee will publish further labor market details on metrics like unemployment and wages in early September – so stay tuned.
What about Germany? According to the Federal Statistical Office, 45.4 million Germans were in employment in June 2022 – this is 0.1% or 27,00 higher than in May 2022.
This means that Germany joins the UK, France and the US in returning to pre-COVID-19 employment levels. In fact, Germany exceeded February 2020 figures by 0.3% or 140,000 people.
Ultimately, there is room for optimism about the job market as it stands, but it is impossible to predict what the next few months will hold.
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