In the United States, the unemployment rate rose in July as nonfarm payrolls increased by 114,000. According to data released on Friday by the Bureau of Labor Statistics (BLS), the unemployment rate rose to 4.3%.
Economists now expect the economy to add 175,000 jobs in July, up from an earlier estimate of a 206,000 gain in June, and the unemployment rate to remain steady at 4.1 percent. according to Federal Reserve Chairman Jerome Powell said at a press conference on Wednesday that the continued slowdown in the labor market is a sign of further economic weakness and could lead to cuts to the federal funds rate and easing of tight credit conditions weighing on Americans, U.S. News & World Report reported. (Related article: 'The runway is running out': Experts say huge government spending is fuelling economic growth)
“The labor market is in tune with the Fed's efforts to keep inflation in check,” Nella Richardson, chief economist at human resources software company ADP, told U.S. News & World Report. “If inflation does rise again, it won't be because of labor.”
High inflation is putting pressure on businesses' ability to hire, with inflation coming in at 3.0% year-over-year in June, well above the Fed's 2% target. In response to the rise in inflation, the Fed opted to keep its target for the federal funds rate unchanged at a range of 5.25% to 5.50% at the end of its Federal Open Market Committee (FOMC) meeting on Wednesday. This marks the eighth consecutive meeting at which the Fed has chosen to keep interest rates unchanged.
Breaking News: U.S. private companies added 122,000 employees in July.
1.) This is the lowest hiring number in the last 6 months.
2.) The city sought 150,000 jobs.
Further employment data is due on Friday, which suggests the labor market is weakening unexpectedly.
but,… pic.twitter.com/AYrXGg7osb
— Amit (@amitisinvesting) July 31, 2024
Inflation has driven prices up by more than 20% since President Joe Biden took office in January 2021. High inflation, combined with higher borrowing costs due to higher interest rates, has put a strain on Americans' wallets, with the percentage of credit card balances that are 60 days or more past due reaching 2.59% in the first quarter, the highest delinquency rate since records began in 2012.
The labor market could rebound if the FOMC follows through on its overwhelming expectation of cutting the federal funds rate by 0.25 percentage point at its next meeting in September. according to Cutting rates could also help boost real gross domestic product, which is expected to rise to an annualized 2.8% in the second quarter of 2024 from 1.4% in the first quarter due to rising consumer and government spending, according to CME Group's FedWatch tool.
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