- The number of non-agricultural employees rose by 187,000 in August
- Unemployment rate rises to 3.8% from 3.5% in July
- Average hourly wage increase of 0.2%; 4.3% more than in the previous year
WASHINGTON, Sept 1 (Portal) – U.S. job growth accelerated in August, but the unemployment rate rose to 3.8% and wage gains weakened, suggesting that labor market conditions were easing and expectations confirmed that the Federal Reserve will not raise interest rates this month.
The Labor Department’s closely watched employment report on Friday also showed that 736,000 people entered the labor market last month, boosting the labor force participation rate to its highest level in three and a half years.
Employment gains in June and July were revised downward to show 110,000 fewer jobs than previously reported. The report followed news this week that job openings fell to their lowest level in nearly two and a half years in July.
The labor market is slowing in response to the Federal Reserve’s sharp interest rate hikes to cool demand in the economy.
“This is the Fed’s dream jobs report,” said Bill Adams, chief economist at Comerica Bank in Dallas.
Nonfarm payrolls rose by 187,000 jobs last month. That was a significant decline from the average monthly gain of 271,000 over the past 12 months.
The economy needs to create about 100,000 jobs per month to keep pace with the growth of the working-age population.
Economists polled by Portal had forecast a 170,000 increase in non-farm payrolls last month, with estimates ranging from 40,000 to 278,000. A strike by about 16,000 Hollywood actors and the Yellow Truck bankruptcy in early August, which left about 30,000 workers unemployed, had led economists to expect slower job growth in August.
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The trend for initial wage and salary figures to be weaker in August before being revised upwards in September and October was also factored into economists’ expectations.
Although demand for labor is decreasing, some service industries such as healthcare, restaurants, bars and hotels are still desperate for workers. August’s employment gain was led by the healthcare sector, which added 71,000 jobs. The number of employees in the leisure and hospitality sector increased by 40,000. Employment in the industry remains 290,000 jobs below pre-pandemic levels.
22,000 new jobs were created in construction, while employment in manufacturing increased by 16,000 new jobs. Employment in the professional and business services sector rose by 19,000, while temporary employment services, seen as a harbinger of future hiring, continued to decline, losing 19,000 jobs.
The transportation and warehousing sector lost 34,000 jobs as a result of Yellow Trucking’s bankruptcy. There were also job losses in the information sector, partly due to the Hollywood strike.
Wage growth slowed last month, with average hourly wages rising 0.2% after rising 0.4% in July. In the 12 months to August, wages rose 4.3%, after rising 4.4% in July.
US stocks opened higher. The dollar fell against a basket of currencies. US Treasury bond prices were mostly lower.
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PARTICIPATION RATE IS INCREASING
Since March 2022, the Fed has raised its key interest rate by 525 basis points to the current range of 5.25% to 5.50%. According to CME Group’s FedWatch tool, financial markets now believe the central bank is finished raising interest rates and may begin cutting next year. Futures pegged to the Fed’s key interest rate show little chance of a rate hike at the Sept. 19-20 meeting.
The details of the household survey from which the unemployment rate is derived were inconsistent. Household employment increased by 222,000. However, this was not enough to absorb the 736,000 people who joined the force.
As a result, the unemployment rate rose to 3.8% from 3.5% in July, the highest level since February 2022. The unemployment rate remains below the Fed’s recent median estimate of 4.1% through the fourth quarter of this year.
The labor force participation rate, or the percentage of working-age Americans who have a job or are looking for one, rose to 62.8%. That was the highest since February 2020, up from 62.6% in July.
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Reporting by Lucia Mutikani, editing by Nick Zieminski, Chizu Nomiyama and Paul Simao
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