US Jobs report shows hiring has shifted into lower gear
The labor market appears to be treading water, with employers’ desire to hire staying just ahead of the supply of workers looking for jobs.
That’s the picture that emerges from the August jobs report, released Friday, which offered evidence that while softer than it has been in years, the landscape for employment remains healthy, with wages still growing and Americans still eager to work.
“This report does not indicate that we’re taking another step toward a recession, but we’re still seeing further signs of cooling,” said Sam Kuhn, an economist with the recruitment software company Appcast. “We’re trending more closely to a 2019 labor market than the labor market in 2010 or 2011.”
Employers added 142,000 positions last month, the Labor Department reported. That was somewhat fewer than forecast, bringing the three-month average to 116,000 jobs after the two prior summer months were revised down significantly. Over the year before June, the monthly average was 220,000, although that number is expected to shrink when annual revisions are finalized next year.
The unemployment rate edged down to 4.2%, alleviating concerns that it was on a steep upward trajectory after July’s jump to 4.3%, which appears to have been driven by weather-related temporary layoffs.
In other signs of stability, the average workweek ticked up to 34.3 hours and wages grew 0.4% over the month, slightly more than economists had expected but not enough to add significant fuel to inflation.
The data is unlikely to send a clear signal to the Federal Reserve as it weighs how quickly to start relaxing interest rates later this month. Investors currently expect a quarter-point cut, but it could be larger if Fed officials judge that the labor market is deteriorating swiftly.
Stocks and bond yields fell through the day, as investors digested the mixed report.
Other indicators remain robust. The economy grew at a 3% annualized rate in the second quarter when adjusted for inflation, an acceleration from the first quarter. Some measures of economic confidence, such as the University of Michigan consumer sentiment index, have been recovering from a deep swoon over the past few years. A disproportionate number of jobs have been added since the pandemic in relatively high-wage industries, the Federal Reserve Bank of Cleveland reported.
The strength of the labor market has been powered by large numbers of people starting to look for work, especially women 25-54, who reached their highest level of labor force participation on record, at 78.4%. That’s come despite the tight market for child care, where employment has been sinking since May.
Employers have not started shedding workers in large numbers; initial claims for unemployment insurance have drifted downward in recent months and the layoff rate remains lower than usual. The number of people working part time because they can’t find more hours, while rising, remains within historical norms.
But businesses haven’t been posting many positions, and workers have been loath to leave for new opportunities. The job opening rate is back down where it was before the pandemic, after spiking to record levels in 2022, and there are roughly the same number of vacancies as people looking for work.
Food service and drinking places added about 30,000 jobs in August, but the industry has barely surpassed its prepandemic level after a slow recovery.
The only other sectors adding significant numbers of jobs were health and other categories of care, which gained 44,000 jobs, and construction, which was up by 34,000 jobs — another month of surprisingly robust growth two years into a cycle of elevated interest rates that has made financing new projects more difficult.
One notable weak spot is manufacturing, which has been mostly flat since late 2022 and contracted by 24,000 jobs in August. Outside federally subsidized investments in battery and semiconductor plants that have generally not started operating, high interest rates have weighed on new investment, while the strong dollar has depressed exports.
The impending election also has companies putting off big decisions, given the large policy changes that could result if the White House or Congress changes hands, said Timothy Fiore, the Institute for Supply Management’s Manufacturing Business Committee chair.
This article originally appeared in The New York Times.
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