US economy adds 162,000 jobs in August, unemployment holds at 4.1% despite fears of recent slowdown | Today’s news
The U.S. economy added 162,000 jobs in August, far beating forecasts and providing fresh evidence that the labor market remained more resilient than the weak summer run suggested.
The US economy is creating 162,000 jobs
The unemployment rate was unchanged at 4.1%, while labor force participation rose slightly to 61.6%, according to data released Friday by the Bureau of Labor Statistics. The number of unemployed was about 7 million, almost unchanged from July.
The scale of job growth was staggering. Employment increased by an average of only 31,000 per month from a year earlier, meaning August’s 162,000 increase represented a significant departure from this subdued pace. MarketWatch reported that economists had expected a gain of roughly 53,000 jobs.
Quick answers to key questions
•5 QUESTIONS
The US economy added 162,000 jobs in August, well above forecasts and a notable improvement from previous months.
The unemployment rate held steady at 4.1% as the number of unemployed remained around 7 million, indicating a stable labor market.
Revisions showed that job gains in July and June were higher than initially reported, adding 55,000 jobs combined, easing fears of a possible contraction.
Yes, uneven job growth with declines in industries such as information and subdued numbers in retail and professional services suggests underlying vulnerabilities in the labor market.
Strong job creation may give the Federal Reserve more flexibility when it comes to interest rates, especially if inflation data remains high, which will factor into their September 15-16 meeting.
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More importantly, the latest report also changed the picture for the previous two months.
July, originally reported as a loss of 23,000 jobs, was revised to show a gain of 21,000. June’s gain was also revised upward, from 20,000 to 31,000. Taken together, the revisions mean employment in June and July was 55,000 higher than originally estimated.
This effectively removed most of the concerns raised by the originally reported July contraction.
Hiring in August was not limited to one part of the economy. Food and beverage businesses saw the biggest increase, adding 59,000 jobs, well above their average monthly gain of 12,000 from a year earlier. Local government education added another 42,000 jobs, while manufacturing employment rose by 16,000.
Health care, which has been one of the most reliable sources of employment growth in the US, has been significantly less vigorous. It added 13,000 jobs in August, well below the average monthly gain of 32,000 over the past year.
There were also clear areas of weakness. Employment in the information industry fell by 23,000, highlighting the uneven nature of the recovery, even as overall payrolls strengthened. Several other major industries, including retail trade, financial activities, transportation and storage, and professional and business services, showed little change over the month.
Wages continued to rise, although not at a rate that would dramatically change the inflation picture. Average hourly earnings for private sector workers rose 10 cents, or 0.3%, to $37.75. Wages increased by 3.1% year-on-year. The average working week also increased slightly, reaching 34.4 hours.
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How does this matter for the upcoming Federal Reserve meeting?
The report is likely to be of great importance to the Federal Reserve as officials prepare for their September policy meeting. The Federal Open Market Committee is scheduled to meet on September 15-16, with a policy decision and press conference scheduled for September 16.
A labor market that is creating jobs at a stronger pace while keeping unemployment at 4.1% gives policymakers more flexibility than they would have if employment fell for a second month in a row.
However, the numbers alone will not solve the interest rate issue. The Fed’s decision will also depend heavily on incoming inflation data. MarketWatch said the strength of the jobs report gives the central bank more room to focus on inflation if price pressures remain elevated.
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For now, the August numbers suggest that fears of a sudden deterioration in US employment were premature. The labor market is not returning to the extraordinary pace seen earlier in the post-pandemic recovery. However, it is proving much harder to derail than July’s weak headline numbers suggested.
