Weak US employment data in July - a surprising decrease of 23,000 jobs
US employment saw a surprising decline of 23,000 jobs in July, missing the forecast of 83,000 new positions. Meanwhile, the unemployment rate fell to 4.1%.
July US employment data showed a surprising decrease of 23,000 jobs, contrasting with forecasts that anticipated the addition of 83,000 new positions. However, the unemployment rate fell to 4.1%, compared to the expected 4.2% (the same as in June). June's figures were revised, showing an addition of only 20,000 jobs to the US economy, down from the previously reported 57,000. Additionally, the average hourly wage in July unexpectedly fell to 3.2% in annual terms from 3.4% in June, missing the expected rise to 3.5%.
Last Wednesday, the Central Bank, led by Kevin Warsh, held the interest rate at 3.75% for the fifth consecutive time. During the press conference, Warsh stated that the Open Market Committee "is not ignoring" the significant economic shocks impacting the US economy and remains committed to controlling inflation.
"If necessary, we will not hesitate to act," Warsh said.
The decision was carried by a majority of 9 to 3. The dissenting votes came from regional Federal Reserve Bank presidents—Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas—who have been vocal about the need for higher interest rates to combat inflation, which has remained above the Fed's 2% target for over five years.
"A large part of our focus has been on trying to understand and identify underlying inflation dynamics within these shocks—we take them seriously," said Fed Chair Kevin Warsh, noting a "series" of shocks, such as the war in Iran. He added that the goal is to foster growth while ensuring inflation becomes more contained and focused, though he admitted that these shocks make policy decisions more complex.
Two weeks earlier, data indicated a surprising slowdown in US inflation, which rose by 3.5% annually in June against an expected 3.8%. Consumer prices recorded their sharpest decline in over six years, as a drop in energy costs provided temporary relief from this year's inflationary surge. In May, annual inflation had reached 4.2%.
