The U.S. economy added 315,000 jobs in August – fewer than analysts had expected – and the unemployment rate increased to 3.7%, according to the U.S. Bureau of Labor Statistics.
Notable job gains occurred in professional and business services, healthcare, and retail trade.
The number of unemployed persons increased by 344,000 to 6.0 million. Among the unemployed, the number of permanent job losers increased by 188,000 to 1.4 million.
The number of long-term unemployed – those jobless for 27 weeks or more – was little changed at 1.1 million. The long-term unemployed accounted for 18.8% of all unemployed persons.
The labor force participation rate increased by 0.3 percentage point to 62.4%. This is 1.0 percentage point below its February 2020 level.
Wages continued to rise – but at nowhere near the rate of inflation. In August, average hourly earnings for all employees on private non-farm payrolls rose by 10 cents, or 0.3%, to $32.36.
Over the past 12 months, average hourly earnings have increased by 5.2%.
In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.4%, to $27.68.
Odeta Kushi, deputy chief economist for First American, says although job gains in August fell short of expectations and the unemployment rate inched up, the labor market remains strong.
“The prime-age labor force participation rate increased from 82.4 percent to 82.8 percent, reaching its highest point since right before the pandemic hit in February 2020, which signals that people are returning to the labor force,” Kushi says in a statement. “And they’re returning to a still strong labor market. The July Job Openings and Labor Turnover Survey (JOLTS) report revealed that job openings increased to 11.2 million, while hires fell to 6.4 million, indicating a continuing mismatch between labor supply demand. Two jobs for every unemployed person is a sign of a tight labor market.”
“Late July/early August pulse survey data shows the share of prime-age adults who reported that their reason for not working was ‘caring for children not in school/daycare’ ticked up to 17%, the highest level since July 2021,” Kushi says. “As kids return to school in the fall, this share is likely to decline. More workers in the labor force could help to narrow the gap between labor demand supply, and ultimately slow the pace of wage growth.”
The residential construction sector only picked up 2,300 jobs in August, while non-residential construction only picked up 700.
“Residential building employment is up 7.7 percent compared with pre-pandemic levels, while non-residential building employment remains 5 percent below,” Kushi says. “The big gains this month came from specialty trade contractors, both residential and non-residential. This subsector consists of employers whose primary activity is performing specific activities, such as pouring concrete, site preparation, plumbing, painting and electrical work.”
“While builder confidence fell again in August due to the slowing housing market and ongoing supply-side headwinds, multi-family starts were up 17 percent year over year in July and homeowners who are rate-locked in may choose to remodel instead of move,” she adds. “You need more hammers at work to build and remodel homes.”
Photo: Saulo Mohana