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The U.S. economy blew past expectations from economists, adding 528,000 jobs in July and bringing the unemployment rate to 3.5%, tying a 50-year-old record low.
As a result of the increase, the U.S. has now recovered all of the 22 million jobs lost during the COVID pandemic.
The gains were led by the leisure and hospitality industry which added 96,000 jobs. Professional and business services added an additional 89,000, while the health care industry added 70,000 jobs. Government payrolls increased by 57,000, while construction and manufacturing added 32,000 and 30,000 jobs, respectively.
"A powerful increase in July employment—at 528,000, the largest since last December—underscored bedrock support from the labor market, putting the economy on a more gradual trajectory for a recession," said Gary Schlossberg, a global strategist at Wells Fargo Investment Institute, according to Fox Business.
Hourly wages were also up in July, increasing 0.5% for the month and 5.2% since last year.
The stock market dropped after the Labor Department released the data as investors were concerned that numbers could result in inflation rising even higher, which could force the Federal Reserve to hike interest rates by another 0.75%.
"On the one hand, it gives the Fed more confidence that it can tighten monetary policy without leading to a widespread rise in unemployment," said Daniel Zhao, lead economist for job review site Glassdoor, according to CNBC. "But it also shows that the labor market isn't cooling, or at least wasn't cooling as fast as anticipated. ... At the very least, even though it's a surprise, I think the Fed is still on track to continue tightening monetary policy."