Labor Market Returns to Pre-pandemic Level With July Additions

  • Brian Turner
  • Aug 5, 2022
  • The labor market returned to its pre-pandemic level with the payrolls expanding by 528,000 in July and unemployment rate dipping to a five-decade low of 3.5%.

    The U.S. labor market continued to expand for the nineteenth month in a row and has now regained the 22.0 million jobs lost during the first two months of pandemic in March and April 2020. 

    July payrolls increased 528,000 following the 372,000 additions in June, the Bureau of Labor Statistics said Friday. 

    The unemployment rate declined to 3.5%. 

    Both the non-farm employment and jobless rates have returned to their February 2020 pre-pandemic level. 

    The sharp accelerations in payroll additions surprised many economists who were looking for an increase of less than 265,000 according to an informal survey of six economists conducted by 

    Investors worried that the larger-than-expected payrolls gains despite the slowing economic backdrop may support the Federal Reserve's case for raising rates at a faster pace at its next meeting. 

    The latest labor market data will certainly encourage the policymakers to lift rates by as much as 75 basis points at its next two-day meeting ending on September 21. 

    The yield on 10-year U.S. Treasury notes shot up to 2.85% and 2-year notes jumped to 3.255%. 

    While the demand for workers remains strong the availability is not rebounding as strongly as it was in the beginning of 2022. 

    The labor force participation rate declined to 62.1% in July from 62.2% in June, its third monthly decline in a row. 

    The imbalance in the supply and demand of workers is showing up in wages. 

    The average hourly wages rose by 15 cents, or 0.5% from the previous month to $32.27 and the annual rate of wage growth was unchanged at 5.2%. 

    The smaller increases in wage growth are certainly lagging the broader inflation in the economy. 


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