The US economy added 187,000 jobs in August, slightly surpassing market expectations, according to the latest employment report from the Bureau of Labor Statistics (BLS). While the unemployment rate also increased, rising from 3.5% to 3.8%, it is still relatively close to a 50-year low. However, there is more to the story than just these numbers.
The report indicates that the economy added 187,000 new jobs in August, but the national unemployment rate rose by 0.3%. Wall Street analysts had predicted the creation of 170,000 jobs, but the actual figure exceeded expectations.[0] This follows a revised increase of 157,000 jobs in July.[1] Despite the strong hiring activity, the unemployment rate ticked up to 3.8%, while the participation level in the labor force also increased, indicating a better balance between supply and demand for workers.
The increase in the unemployment rate means that an additional 514,000 people lost their jobs in August, bringing the total number of unemployed individuals in the country to around 6.4 million.[2] The rate has fluctuated between 3.4% and 3.7% since March 2022, according to the BLS.[2]
Although the unemployment rate rose to 3.8%, the highest level since February 2022, it doesn't provide the complete picture. The jobless claims data showed a decrease of 13,000 to 216,000 in the week ending September 2, the lowest level since mid-February.[3] This indicates that there has been a decline in the number of initial jobless claims, which are seen as a proxy for layoffs.[4] Economists had originally projected that the figure would climb to 234,000.[4]
Additionally, average hourly earnings increased by 0.2% for the month and 4.3% from a year ago.[5] However, both figures fell below the respective forecasts of 0.3% and 4.4%.[6] This suggests that inflation pressures may be easing.[7] The number of hours worked also increased slightly to 34.4.[7]
In terms of sectors, the healthcare industry saw the biggest gain, adding 71,000 jobs.[6] Other sectors that experienced job growth were leisure and hospitality, social assistance, and construction. However, transportation and warehousing lost 34,000 jobs, likely due to the bankruptcy of Yellow trucking, and the information sector declined by 15,000 jobs.[6]
The increase in job seekers has led to a rise in the labor force participation rate, which now sits at 62.8%, the highest since February 2020, just before the Covid-19 pandemic.[8] This indicates that more people are entering the labor market in search of work. The increase in job openings is a positive sign, but it also means that there are more people looking for jobs than there are available positions.
The increase in the unemployment rate and the jobless claims data come at a pivotal time as Federal Reserve officials consider the next steps for monetary policy. While markets expect the Fed to skip a rate increase at its upcoming meeting, there is still a 38% probability of a final hike in the following meeting, according to CME Group data.[6]
Overall, the jobs report for August shows a mixed picture of the US economy. While job creation exceeded expectations, the increase in the unemployment rate and the decline in average hourly earnings suggest that there are still challenges to overcome. The labor market is showing signs of improvement, but there is still work to be done to fully recover from the effects of the Covid-19 pandemic.[9]
0. “ADP National Employment Report: Private Sector Employment Increased by 177,000 Jobs in August; Annual Pay was …” PR Newswire, 30 Aug. 2023, https://www.prnewswire.com/news-releases/adp-national-employment-report-private-sector-employment-increased-by-177-000-jobs-in-august-annual-pay-was-up-5-9-301913687.html
1. “Gold prices under pressure as U.S. weekly jobless claims fall more than expected by 13K” Kitco NEWS, 7 Sep. 2023, https://www.kitco.com/news/2023-09-07/Gold-prices-under-pressure-as-U-S-weekly-jobless-claims-fall-more-than-expected-by-13K.html
2. “August jobs report is another strong one, but signs of cooling emerging” Fox Business, 6 Sep. 2023, https://www.foxbusiness.com/personal-finance/employment-situation-job-loss-federal-reserve
3. “US Initial Jobless Claims Fall to Lowest Level Since February” BNN Bloomberg, 7 Sep. 2023, https://www.bnnbloomberg.ca/us-initial-jobless-claims-fall-to-lowest-level-since-february-1.1968397
4. “Initial jobless claims unexpectedly decline to 216,000 By Investing.com” Investing.com, 7 Sep. 2023, https://www.investing.com/news/economic-indicators/initial-jobless-claims-unexpectedly-decline-to-216000-3169765
5. “Before the Bell: US stocks temper job data gains, rate outlook still clouded” The Australian Financial Review, 1 Sep. 2023, https://www.afr.com/markets/equity-markets/us-stocks-temper-job-data-gains-rate-outlook-still-clouded-20230902-p5e1gl
6. “U.S. economy added 187,000 jobs in August, more than was expected” NBC News, 1 Sep. 2023, https://www.nbcnews.com/business/business-news/us-added-187000-jobs-august-was-expected-rcna102946
7. “Unemployment rate unexpectedly rose to 3.8% in August as payrolls increased by 187,000” CNBC, 1 Sep. 2023, https://www.cnbc.com/2023/09/01/jobs-report-august-2023.html
8. “Statement by Acting Secretary of Labor Su on August jobs report” US Department of Labor, 1 Sep. 2023, https://www.dol.gov/newsroom/releases/osec/osec20230901
9. “Labor Force Spikes, Wage Pressures Stuck at High Levels, Job Market Sorts Out the Distortions from the Pandemic” WOLF STREET, 1 Sep. 2023, https://wolfstreet.com/2023/09/01/labor-market-sorts-out-the-distortions-from-the-pandemic-labor-force-spikes-wage-pressures-stuck-at-high-levels/
