More than half a million additional jobs were created on the American job market in July.

The unemployment rate fell to 3.5 percent, one of the lowest values ​​in the last 50 years.

This was announced by the US Department of Labor.

Forecasters had predicted only half as many additional positions to be filled.

Winand von Petersdorff-Campen

Economic correspondent in Washington.

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The jobs gains of the previous two months have been revised upwards.

On the one hand, the surprising development strengthens the hope that the United States can avoid a severe recession.

On the other hand, it feeds the concern that high inflation will take hold.

The consumer price index CPI was 9.1 percent higher at the end of June than in the same month of 2021, the July price development will be announced next week.

Additional jobs were created in almost all sectors.

Even the construction industry hired workers, although it is considered to be particularly vulnerable to interest rate hikes.

Even the fact that the economy contracted slightly in the first two quarters and consumer spending, so vital to the economy, slowed, didn't stop companies from hiring.

This trend overshadows recent anecdotal reports of layoffs at Walmart, Robinhood, and Shopify.

Is the US Federal Reserve tightening its monetary policy?

The number of vacancies has recently fallen slightly, but at around ten million, it is still twice as high as the number of people actively looking for legal employment.

Hourly wages rose by 5.2 percent compared to the same month last year.

This is a slightly higher increase than in the previous months.

The news was initially received negatively on the stock exchange: stock index futures gave way.

Apparently, the news of the surprisingly strong labor market reinforces the expectation that the US central bank could also tighten monetary policy by increasing interest rates.

Economists sympathetic to the Democratic Party's agenda had recently clarified their view that inflation would come at the price of a moderate economic crisis brought about by tight monetary policy.

The situation is becoming increasingly difficult for the American government and the governing Democrats: Instead of taking the credit for the full employment achieved in the classic political tradition, they see approval for their policy dwindling because of inflation, which affects almost all product groups.

However, the Democrats can report an initial success: the so-called law to reduce inflation is nearing its passage by the American Senate after a critical senator from the Democratic Party signaled her approval.

The bill was negotiated by Senate Democrat Leader Chuck Schumer and West Virginia Senator Democrat Joe Manchin.

The latter had overturned previous major legislative projects, including the two trillion dollar plan for the climate-friendly restructuring of the economy.

However, contrary to what the name "Inflation Reduction Act" suggests, the law does not make a significant contribution to reducing inflation, according to economists.

The package mainly contains support measures for the climate-friendly restructuring of the American economy.

The subsidies for electric cars, batteries or CO2 recovery often contain requirements for production in the United States and thus increase the manufacturing costs.

Other clauses, in turn, dampen price developments.

The law also includes tax hikes that hit businesses and higher earners, which could cool the economy, albeit not in the short term.