High unemployment rate in the United States, slowing wage growth as the labor market slows

  • Nonfarm payrolls increased by 187,000 in August
  • The unemployment rate rose to 3.8% from 3.5% in July
  • Average hourly earnings earn 0.2%; An increase of 4.3% year on year

WASHINGTON (Reuters) – U.S. job growth recovered in August, but the unemployment rate jumped to 3.8 percent and wage gains eased, indicating that labor market conditions are improving and bolstering expectations that the Federal Reserve will not raise rates. Interest this month. .

The Labor Department’s closely watched employment report on Friday showed that 736,000 people entered the labor market last month, boosting the participation rate to the highest level in three and a half years.

Employment gains in June and July were revised down to show 110,000 fewer jobs than previously reported. The report follows news this week that job opportunities fell to their lowest level in two-and-a-half years in July.

The labor market is slowing in response to large interest rate increases by the US central bank to cool demand in the economy.

“This is the jobs report the Fed dreams of,” said Bill Adams, chief economist at Comerica Bank in Dallas.

Nonfarm payrolls rose by 187,000 jobs last month. This represents a sharp decline from the average monthly gain of 271,000 over the past 12 months.

The economy needs to create approximately 100,000 jobs per month to keep pace with the increase in the working-age population.

Economists polled by Reuters had expected non-farm payrolls to increase by 170 thousand jobs last month, with estimates ranging from 40 thousand to 278 thousand. The strike involving about 16,000 Hollywood actors and the bankruptcy of Yellow Traniger in early August, which left about 30,000 workers unemployed, led economists to expect job growth to slow in August.

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The tendency for initial payrolls to be weaker in August before subsequently revising upward in September and October also factored into economists’ forecasts.

Although labor demand has slowed, some service businesses such as healthcare, restaurants, bars and hotels are still in desperate need of workers. The health care sector led employment gains in August, adding 71,000 jobs. Leisure and hospitality salaries increased by 40,000. Employment in the industry remains 290,000 jobs below its pre-pandemic level.

The construction industry added 22,000 jobs, while manufacturing sector payrolls rebounded by 16,000 jobs. Employment in the professional and business services sector rose by 19,000, but temporary assistance services, seen as a harbinger of future employment, continued to decline, with 19,000 job losses.

The transportation and warehousing sector lost 34,000 jobs, reflecting the bankruptcy of the yellow trucking company. There were also job losses in the information sector, partly reflecting the Hollywood strike.

Wages growth slowed last month, with average hourly earnings rising 0.2% after rising 0.4% in July. In the 12 months through August, wages rose 4.3% after a 4.4% increase in July.

US stocks opened higher. The dollar fell against a basket of currencies. US Treasury bond prices were mostly lower.

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High participation rate

Since March 2022, the Fed has raised the interest rate by 525 basis points to the current range of 5.25% to 5.50%. Financial markets are now betting that the central bank is done raising interest rates and may start cutting them next year, according to CME Group’s FedWatch. Fed rate futures show only a slight chance of a rate hike at the September 19-20 meeting.

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Details of the household survey from which the unemployment rate is derived were mixed. Domestic employment rose by 222,000. But that was not enough to absorb the 736,000 people who joined the force.

As a result, the unemployment rate rose to 3.8%, the highest level since February 2022, from 3.5% in July. And the unemployment rate remains below the Fed’s latest average estimate of 4.1% by the fourth quarter of this year.

The labor force participation rate, or the share of working-age Americans who have or are looking for a job, rose to 62.8%. This was the highest level since February 2020 and was up from 62.6% in July.

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Reporting by Lucia Mutikani; Editing by Nick Szyminski, Chizu Nomiyama and Paul Simao

Our standards: Thomson Reuters Principles of Trust.

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