Economists Expect US Employment Growth to Slow Further in July, But Remain Strong

Economists expect employment growth in the United States to slow further in July, but the economy could still manage to avoid a recession as the Federal Reserve’s huge interest rate hikes dampened demand.

Later today (4 August), the Labor Department will release employment data that is widely anticipated to show a tight job market, with a stable unemployment rate near multi-decade lows and slower pay growth. 

This would be in line with last month’s strong consumer spending and June’s sharply lowering inflation increase.

Eighty economists polled by Reuters forecast an increase from June’s 209,000 to July’s 200,000 in nonfarm payrolls. That would be the smallest increase since December 2020.

Economists who predicted a slowdown by the fourth quarter are now confident that the Fed’s “soft-landing” scenario is possible.

Senior economist at Wells Fargo Sam Bullard stated, “There are signs that labor demand is decelerating, but it’s not like it’s fallen off a cliff.”

“Certainly, if we get another payrolls number in the 200,000 region, that would add to evidence that the Fed can engineer a soft landing.”