Employers added 187,000 jobs in August, unemployment jumps to 3.8%
The U.S. economy added 187,000 jobs in August, roughly in line with analysts' expectations, while the nation's unemployment rate jumped sharply to 3.8%, the Department of Labor reported Friday.
Analysts had expected employers to add 170,000 jobs last month, according to a survey of forecasters by data firm FactSet.
Employment rose in the health care, leisure and hospitality, social assistance, and construction industries, but declined in transportation and warehousing.
The jobs report reflects recent labor market headwinds. Partially accounting for the high unemployment rate are the Hollywood strikes, as Screen Actors Guild and American Federation of Television and Radio Artists (SAG-AFTRA) and Writers Guild of America (WGA) workers were dropped from payrolls. Trucking company Yellow's July bankruptcy also weighed on job gains.
The unemployment rate remains relatively low by historical standards, but in August reached its highest level since early 2022.
"Although the unemployment rate jumped to an 18-month high of 3.8%, from 3.5%, that arguably isn't quite as alarming as it looks since it was driven by a 736,000 surge in the labor force, with household employment rising by a reasonably healthy 222,000," Andrew Hunter, deputy chief U.S. economist with Capital Economics, said in a report.
Current labor market conditions suggest a return to pre-pandemic conditions, and could mean that the Fed will pause hikes or even cut interest rates in the first half of next year.
"A slowing in wage pressures and rising participation are encouraging, confirming some softening in labor market conditions, in line with what Fed officials want to see," Rubeela Farooqi, chief U.S. economist for High Frequency Economics, said in a research note.
"We think these data support the case for no rate hike at the September FOMC meeting," she said. "As for the rate path past September, our base case remains that the Fed is at the end of the rate hiking cycle. However, with the economy reaccelerating, posing a potential upside risk to inflation, another increase in rates later this year cannot be taken off the table."
