New figures show that the labor market in the United States continues to recover strongly. Unemployment has been at an all-time low since March last year.
943,000 new non-agricultural jobs were created in the United States in July, stronger than economists expected.
According to Bloomberg, 870,000 new jobs are expected.
Unemployment fell to 5.4 percent, down 0.5 percent from the previous month. This is the lowest since March last year.
Before the epidemic hit the United States, unemployment was 3.5 percent in February 2020, but then it rose sharply. Unemployment peaked at almost 15 percent in April of the same year, when Coronero was the worst hit.
– Very strong numbers
Today’s job report shows that 850,000 new jobs were created in the world’s largest economy after the labor market hit hard in the United States in June, but that number has now been revised to 938,000.
– These are very strong figures, says chief economist Kjersti Haugland to E24 in DNB markets.
Hawkland points out that unemployment has dropped significantly than expected.
– This certainly indicates tightening from the Fed (US Federal Reserve, Jr.NM). The question is when, even those who are now very careful with the comments coming from the central bank representatives believe that the tight year will come at the beginning. These figures reinforce the belief that this may be the case, Hoagland says.
Hoagland says the central bank may announce a tightening of bond purchases at a meeting in September.
– What about the threat from the delta variant, and can it change the central bank’s view?
This and other, worsening differences are a constant concern for central banks and officials around the world.
– The epidemic is now high in many states, but it is not something that will prevent a surge in the US economy. There are some infection control measures in the United States, and it can be financially beneficial. At the same time, a good portion of the population has been vaccinated, and we are in a completely different situation than we were in previous epidemics. There is a relatively small probability that there will be strikes that will affect economic growth, Hoagland believes.
Higher wage growth
Wage growth was four percent compared to the same month last year.
Can the central bank change its view of inflation after these figures?
– The central bank is very monetary, and this rise in inflation is temporary. They will continue to say this in the future.
It will be important for the central bank and others to follow pay growth. Further inflation is driven by wage growth, which means that inflation will last longer. We are seeing wage growth and the central bank will not be completely affected. There is a risk of reversal that inflation has risen, and they should start to tighten, Hoagland says.
Hoagland points out that a representative of the central bank said that they should reduce the purchase of bonds quickly and expeditiously in order to be ready to raise interest rates in 2022 when needed.
– Inflation and wage growth are on the rise, but there is talk of trouble on the way out of the epidemic, Hoagland says.