WASHINGTON–New data show job growth slowed down in August, but analysts see good news in the new numbers, which one credit union economist described as “plenty strong.”
Economists are viewing the August numbers for the U.S. Bureau of Labor Statistics as indicating that the Federal Reserve’s ongoing pace of increasing interest rates will not tip the economy into a recession.
The BLS reported employers added 315,000 jobs last month on a seasonally adjusted basis, which was down from 526,000 in July, though it still represented ongoing, strong growth.
The unemployment rate rose to 3.7%, from a half-century low of 3.5% in July.
“The August jobs report gave the (Federal Open Market Committee) exactly what they want. Job growth came down from the stratospheric heights of the prior month but remained plenty strong enough to ward off fears of a recession,” said NAFCU Chief Economist and VP-Research Curt Long. “More important was the improvement in labor force participation, which had been scuffling in recent months. That should relieve some of the tautness in the labor market and allay concerns about labor shortages feeding inflationary pressures. "
Added CUNA economist Dawit Kebede, "The U.S. economy added 315,000 jobs in August with gains across several industries. The current total nonfarm employment is higher than the pre-pandemic level by a quarter million. This is a strong jobs report indicating a resilient economy despite slowing signs in some other areas.
“The labor force participation rate increased by three-tenths of a percentage point, adding about 800,000 people to the labor market. However, participation is still lower than its level in February 2020. The unemployment rate increased from 3.5 to 3.7 as more people who were on the sidelines joined the labor market," Kebede continued. "The Federal Reserve will likely stay on course, raising the interest rate to a restrictive level considering this and the Job Openings and Labor Turnover Survey released this week. There are two job vacancies available for each unemployed person creating a very tight labor market. This can lead to inflationary wage increases.”
‘Really Impressive Feat’
Sarah House, an economist at Wells Fargo, told the New York Times, “It’s definitely a downshift from what we saw earlier in the year. But step back and look at the bigger picture here. The fact that we’re still putting up gains of over 300,000 even as we’ve recovered all the jobs lost, that’s still a really impressive feat.”
The new data show average hourly earnings rose 0.3% in August, and were up 5.2% from a year earlier, a slower rate of growth than in recent months. For what the Labor Department calls “production and nonsupervisory employees” — hourly earnings were up 0.4% from a month earlier, and 6% from a year ago.
The Data Points
According to the Bureau of Labor Statistics:
- Among the major worker groups, the unemployment rates for adult men (3.5%) and Hispanics (4.5%) rose in August. The jobless rates for adult women (3.3%), teenagers (10.4%), Whites (3.2%), Blacks (6.4%), and Asians (2.8%) showed little change over the month.
- Among the unemployed, the number of permanent job losers increased by 188,000 to 1.4 million in August. The number of persons on temporary layoff was virtually unchanged at 782,000.
- The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.1 million in August. The long-term unemployed accounted for 18.8% of all unemployed persons.
- The labor force participation rate increased by 0.3 percentage point over the month to 62.4%, but is 1.0 percentage point below its February 2020 level. The employment population ratio was little changed at 60.1% in August and remains 1.1 percentage points below its February 2020 value.
- The number of persons not in the labor force who currently want a job declined by 361,000 to 5.5 million in August. This measure remains above its February 2020 level of 5.0 million.