WASHINGTON–U.S. employers added 187,000 jobs in August and the unemployment rate took an unexpected jump in August, according to new data from the Labor Department.
"The August jobs report showed continued cooling in the labor market,” said NAFCU VP-Research and Chief Economist Curt Long. “The increase in the unemployment rate is notable but not a major concern. It primarily reflects a surge in labor force participation, with teenaged workers comprising an outsized share of that surge. Monthly wage growth fell to its lowest level in over a year, but average hours worked grew, suggesting that workers are not at risk of seeing rising layoffs any time soon. Overall, this was a dovish report that supports a pause on rate hikes from the Federal Reserve."
CUNA: 'Continued & Slow Deceleration'
Added CUNA Senior Economist Ligia Vado, “August’s employment additions are slightly higher than the consensus economic forecast of 170,000 but support a continued and slow deceleration in the labor market when compared to the average monthly job gains over the prior 12 months of 271,000. This is good news for the Federal Reserve efforts of reducing inflation, as it signals that the labor market is cooling off. The new labor market statistics also reinforce the policy consensus and CUNA's economic forecast that there is a strong possibility that the Federal Reserve Bank will pause its aggressive hikes of the Fed Fund rate for the remaining of the year.
“However, there is still uncertainty on the time span the Federal Reserve will keep interest rates high, and this timeline will depend on the evolution of several metrics such as core inflation, which remains elevated for policy standards," Vado continued.
Other Data Points
After a run of 29 months in which job growth never dipped below 200,000, seasonally adjusted, the last three months have all fallen short of that mark, the New York Times reported.
Among other data points in the new Labor Department report:
- American workers got smaller pay increases in August. Average hourly earnings rose 0.2% from July, the slowest pace of monthly growth since early last year. Pay was up 4.3% from a year earlier, versus a peak growth rate of nearly 6 % in March 2022.
- Education and health services continue to dominate job creation, contributing more than half the total growth in August.
- Leisure and hospitality continues to recover and construction has remained surprisingly robust considering stiff headwinds from high interest rates.
- The unemployment rate “popped” from 3.5% to 3.8%, significantly more than expected. “That largely reflects an increase in people looking for work — the labor force grew by 736,000 people, and the participation rate rose to 62.8 percent from 62.6%,” the Times report explained.