Hiring pace slowed in August, but job market still strong

Last updated on September 16th, 2022 at 11:37 am

US – The Bureau of Labor Statistics reports that America’s unemployment rate rose to 3.7% from 3.5% as more people entered the labor market looking for work. The labor force participation rate rose by 0.3 percentage points to 62.4%, but still remains below the pre-pandemic level of 63.4%.

The economy created 315,000 jobs in August, beating economists’ expectations but well below the July report, when employment rose by a revised 526,000 jobs.

The August jobs report is one of the key economic data the Federal Reserve will consider when it meets later this month to decide how much to increase its benchmark interest rate to tamp down stubbornly high inflation. So far, the Fed has fought soaring inflation with incredibly high rate hikes.

Fed Chairman Jerome Powell said last week that the labor market is “clearly out of balance, with demand for workers substantially exceeding the supply of available workers.”

While the economy is slowing and some sectors, such as housing construction, are showing weakness amid a series of massive rate hikes, the labor market remains strong – too strong, according to the Fed.

Earlier this week, the ratio of available vacancies to job seekers rose again to just under 2:1 as job openings hit 11.2 million in July, up 700,000 from June, according to a separate Bureau report. labor statistics.

Jim McCoy, senior vice president of human resources firm Manpower Group, described the job market as the epicenter of an economic hurricane.

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Some of the biggest monthly employment gains in August were in the professional and business services and healthcare sectors, where employment increased by 68,000 and 48,000 jobs, respectively.

The US economy has added an average of 438,000 jobs per month this year after accounting for revisions that cut June and July job growth by 107,000 jobs.

The BLS data shows that average monthly job gains are resilient compared to the pre-pandemic period, when the monthly average was around 200,000. But even slower growth in August will be considered acceptable by the Fed.