The U.S. economy added a robust 528,000 jobs in July, the Labor Department said Friday, returning payrolls to their prepandemic level. The jobless rate dropped to 3.5%.

Businesses have continued to hire despite two straight quarters of economic contraction, cooling consumer spending and rising risks of a recession. Overall employment also has nearly returned to prepandemic levels. But demand for workers is cooling as the economy transitions away from the red-hot expansion that followed the elimination of Covid-19-related restrictions on business activity.

Some companies such as Walmart Inc. and Robinhood Markets Inc. are cutting staff, but overall layoffs are slowly rising, according to weekly unemployment claims.

“Companies used to reach for layoffs as the first option,” said Greg Daco, chief economist for EY-Parthenon, a consulting firm. “Now we’re seeing slower hiring as option number one, followed by targeted hiring freezes, followed by targeted layoffs, followed by broader layoffs.”... Read More: WSJ