A strong labour market suggests the United States is probably not in recession, says Federal Reserve chairman Jerome Powell, although weakening activity in some sectors point to a much-needed cooling of jobs growth.

Speaking after the Fed lifted interest rates by 0.75 percentage points for the second month in a row, Mr Powell said he doubted that the world’s biggest economy had contracted in the three months to the end of June, after shrinking 0.4 per cent in the first quarter. Even if it had, a recession would not be called because of the strength of the labour market.