Job growth surged in August as the economy hit the gas
U.S. employers sped up their hiring in August, reversing several months of slowing gains. Some 201,000 jobs were added, with the unemployment rate holding steady at 3.9 percent, according to the monthly jobs report released by the Labor Department.
Wage growth accelerated, with hourly earnings rising 2.9 percent year-over-year. Economists have been puzzled by wage growth that has appeared stuck between 2 and 2.5 percent, despite an unemployment rate near an 18-year low.
"We're finally seeing wage gains for some low-paid workers. These include things like baristas, cashiers and bank tellers, and I think that's helping boost that average wage number," Andrew Chamberlain, chief economist at the job search site Glassdoor, told CBS MoneyWatch this week.
"The bottom [income] quartile and the bottom decile are moving up faster than everyone else," said Cathy Barrera, chief economist at the job site ZipRecruiter. "Those numbers to me also reflect some of the anecdotal evidence about there being labor shortages in jobs that require little experience or less education: things like construction, transportation, trucking, or child care."
The economy is expanding steadily, fueled by tax cuts, confident consumers, greater business investment in equipment and more government spending. Between April through June, GDP grew at 4.2 percent — the highest rate in four years.
"Wages have been lagging for months given the late stage of the expansion, and they're still nullified by the increase in inflation," said Robert Frick, corporate economist with Navy Federal Credit Union, in a statement. "However, given that jobs added are still above 200,000, showing many more Americans want to work, and wages have started to increase about the 2.7% level, we could be entering that sweet spot for workers that's typical at an expansion's peak."
The August numbers beat economists' predictions of about 190,000 jobs added. Most industries expanded, with particular job growth in health care, education, business and professional services, hospitality and construction. Manufacturing and retail saw small losses.
Job estimates for June and July were revised down, showing that 50,000 fewer jobs were created than initially reported. Still, monthly job growth this year has been the fastest since 2015, with an average of 207,000 jobs a month added.
The economy only needs to add about 100,000 jobs monthly to keep up with population growth. The fact that employers are hiring robustly 10 years into an economic expansion shows, according to some economists, that there are still plenty of workers ready to come off the sidelines into the labor market.
"So far, we seem to be immune from the labor shortage," said Bill Priemer, CEO of Hyland Software, which has 1,200 workers in its Cleveland headquarters and another 2,100 around the U.S. Hyland has hired about 300 people this year, Priemer said, and recently expanded its on-site daycare by some 100 seats.
On the other hand, the labor force participation rate, which counts the percentage of people working or looking for work, ticked down slightly, to 62.7 percent, from where it had been in the summer.
Stock markets opened slightly lower on Friday, with the higher-than-expected wage growth creating some fear of additional interest-rate hikes from the Federal Reserve.
"There's little reason for the Fed not to pull the rate trigger later this month," Sal Guatieri, senior economist at BMO Capital Markets, wrote in a note.