The U.S. economy hit the gas in July, adding more than half a million jobs, giving the Federal Reserve much-needed room to continue its aggressive rate hikes to rein in the highest inflation in 40 years.
In particular, the US labor market added another 528,000 jobs, beating analysts’ estimates of 250,000 jobs last month in a Bloomberg poll. At the same time, the Ministry of Labor revised upwards the figures for June to 398,000 positions instead of 372,000 that it had initially announced.
The US labor market has now expanded for 19 consecutive months.
At the same time, the unemployment rate fell to a five-decade low to 3.5% from 3.6%. Analysts had expected the index to remain unchanged.
The strong job market picture could lead the Federal Reserve to raise interest rates by another 75 basis points at its next meeting in September, analysts say.
The central bank last week increased its interest rates by 75 bp. for the second time in a row, with Governor Jerome Powell noting that the Fed will now go from meeting to meeting, examining incoming economic data, without making long-term predictions about the course of its policy.
Since March US interest rates have risen by a total of 225bps.