US job growth picks up in August; wage gains slow
THE US economy added more jobs than expected in August, but a rise in the unemployment rate to 3.8 per cent and moderation in wage growth pointed to an easing in labour market conditions, which could bolster expectations that the Federal Reserve will not raise interest rates this month.
Non-farm payrolls increased by 187,000 jobs last month, the Labor Department said in its closely watched employment report on Friday (Sep 1). Data for July was revised lower to show 157,000 jobs added instead of the previously reported 187,000. The economy needs to create roughly 100,000 jobs per month to keep up with the increase in the working age population.
Economists polled by Reuters had forecast non-farm payrolls increasing by 170,000 jobs last month. Striking Hollywood actors and the bankruptcy of a major trucking company had led economists to anticipate slower job growth in August.
A tendency for the initial payrolls count to be weaker in August, before being subsequently revised higher in September and October, also factored into economists’ expectations.
The Labor Department’s Bureau of Labor Statistics, which compiles the employment report, earlier reported that there were almost 18,000 workers on strike during the period when it gathered data for August’s report. This included 16,000 members of the Screen Actors Guild-American Federation of Television and Radio Artists.
Yellow Corporation, a trucking company, filed for Chapter 11 bankruptcy in early August, leaving about 30,000 workers unemployed.
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Though demand for labour is slowing, some services businesses such as restaurants, bars and hotels remain desperate for workers. Job openings dropped to the lowest level in nearly 2.5 years in July, the government reported this week.
The unemployment rate increased to 3.8 per cent as more people entered the labour force, from 3.5 per cent in July. It remains below the US central bank’s latest median estimate of 4.1 per cent by the fourth quarter of this year.
Since March 2022, the Fed has raised its policy rate by 525 basis points to the current range of 5.25 per cent to 5.50 per cent. Before the report, financial markets were expecting the central bank to leave its benchmark overnight interest rate unchanged at its Sep 19-20 policy meeting, according to the CME Group’s FedWatch Tool.
With the labour market loosening, wage growth slowed somewhat. Average hourly earnings rose 0.2 per cent after increasing 0.4 per cent in July. In the 12 months through August, wages advanced 4.3 per cent after increasing 4.4 per cent in July.
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