The US added more jobs than expected in August but gains for the prior two months were revised sharply lower and the unemployment rate climbed, signs Federal Reserve rate hikes are gradually tightening the labor market.
The US added 187,000 nonfarm jobs in August, slightly more than expected, while revisions for June and July lowered jobs by a combined 110,000, the Bureau of Labor Statistics reported today. Job growth in August was lower than the average 271,000/month jobs generated in the 12 months prior to August.
The unemployment rate rose to 3.8pc in August, the highest since February 2022, largely on the back of a large gain in the labor force. It was up from 3.5pc in July, which was the lowest in five decades.
The gradual slowdown in job growth suggests the Federal Reserve's sharp course of interest rate hikes in the past year and a half is succeeding in slowing the economy and tamping down inflation without causing a recession. The CME's FedWatch tool showed a 93pc probability the Fed will keep its target rate unchanged at 5.25-5.5pc at its next meeting in late September, up from 88pc yesterday, with a 59.5pc chance the rate will end the year at that level.
"This report clearly increases the pressure on the Fed not to hike this month," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "We remain of the view that the Fed is done, and that the next move will be an easing, as soon as next March."
Employment extended gains in health care, leisure and hospitality, social assistance, and construction. Job growth in transportation and warehousing declined.
Construction added 22,000 jobs in August, while manufacturing added 16,000 jobs and auto assembly was little changed. Wholesale trade added 4,500 jobs and retail trade added 6,300. Transportation and warehousing lost 34,000 jobs. Leisure and hospitality added 40,000 jobs.
Average hourly earnings rose by 4.3pc over the past 12 months, down from 4.4pc over the 12 months through July.
By Robert Willis
