U.S. employers added 187,000 jobs in August. This is slightly higher than analysts expected and shows that the Federal Reserve’s plan to slow growth may be working. The unemployment rate rose to 3.8%. Year-over-year wage growth fell slightly to 4.3%.
187,000: U.S. employers added 187,000 jobs in August.
3.8%: The unemployment rate rose to 3.8%.
4.3%: Wages rose 4.3% over the past year.
While 187,000 jobs would have been a standard month of growth in 2019, in 2023, it shows signs that the labor market is slowing. As the Wall Street Journal reports, August’s report reflects a cooling job market in a strong economy, which is what the Federal Reserve has been hoping to see. Job growth was led by the education and health services sector, and leisure and hospitality saw continued strength. The increased unemployment rate was caused by more Americans looking for work, but the job market has remained tight, with more employers choosing to slow their hiring rather than opt for layoffs.
Wage growth is slowing, but not as quickly as the Fed would like to see. Yearly wage growth fell to 4.3% in August, slightly lower than the previous month. However, wage growth has remained stubbornly higher than 4%. As the New York Times reports, Fed officials believe high wage growth could make it difficult to return to their long-term inflation goal of 2%.
The big question for analysts is whether or not the Fed will raise interest rates at its next meeting in September. According to MarketWatch, the latest report shows enough of a slowdown that could convince officials to hold the interest rates steady. Over the past year-and-a-half, the Fed has increased a key short-term interest rate from near zero to 5.5% in an attempt to slow inflation. At the same time, they want to avoid raising interest rates too high, which could trigger a recession.
August’s jobs report is also typically one of the trickiest of the year to interpret. Fewer businesses than usual respond timely to the monthly questionnaire as many people take summer vacations. Additionally, the strikes in Hollywood and the bankruptcy of a large trucking company could make hiring numbers appear to be artificially lower.