August Jobs - Unemployment Rises on Higher Participation Despite Healthy Job Gains

Solid job gains and higher participation underpin consumer health, illuminates Fed challenges.  U.S. employers added jobs at a healthy, yet more moderate pace in August, offering little definitive evidence of an economic slowdown despite an increase in the unemployment rate.  Labor force participation increased and wage growth decelerated slightly.  Overall, the report highlights a continued consumer demand and a healthy appetite for labor despite high inflation, rising interest rates and an uncertain economic outlook.  Consumer price data, due out on Tuesday (9/13) will factor heavily into the Fed’s next move, but today’s jobs report easily supports another plus-sized rate hike later this month.

• 315K jobs added in August – slightly higher than expected.  The U.S. labor market added 315k jobs in August compared to forecasts that ranged from +75K to +452K with a median of +298K.  Job gains were wide spread with particular strength in professional and business services (+68K), health care (+48K) and retail trade (+44K).  Employment gains in leisure & hospitality (+31K) slowed somewhat from average monthly gains of 91K in the first seven months of the year.  The labor market now counts 240K more jobs than it did prior to the pandemic.
• 3.7% unemployment on higher participation.  The U.S. unemployment rate moved up to 3.7% in August from 3.5% in July.  Forecasts ranged from 3.4% to 3.6% with a median of 3.5%.  Rising unemployment despite strong payroll gains reflects increased labor force participation – More Americans looking to work.  The labor force participation rate increased from 62.1% in July to 62.4% in August (compared to 63.4% pre-pandemic).  Hourly earnings increased 5.2% over the last year and 0.3% month-over-month – down from 0.5% in July and slightly below forecasts of 0.4%.