US economy gains 187k jobs, but unemployment rate rises.

The U.S. economy added 187,000 new jobs in August, surpassing expectations and marking the third-weakest ​jobs report under President Joe Biden, according to the Bureau of‌ Labor Statistics (BLS).

Unfortunately, employment gains were revised down ​once again. The change for July was adjusted ⁢down by 30,000‍ to 157,000, and ⁤jobs for June were adjusted by 80,000 ‍to⁤ 105,000. From January ⁣to ⁢July, there have been a total of 331,000 downward revisions.

On a more positive note, the unemployment rate climbed to 3.8 percent last‍ month, matching market forecasts.

Annual average hourly earnings eased to 4.3 percent, down from 4.4 percent, meeting economists’ expectations. ⁤On a month-over-month basis, average hourly earnings rose 0.2 percent, down from 0.4 percent.

The labor force participation rate edged up ⁣to 62.8 percent, and average weekly​ hours ⁢inched higher to ⁤34.4.

Three sectors contributed the⁤ most to the employment gains: healthcare (71,000), leisure and‌ hospitality (40,000), and ⁢social assistance (26,000). However, transportation and warehousing declined by 34,000, while information employment shed 15,000 workers.

Government ‍payrolls climbed​ by 8,000, and the manufacturing industry added 16,000 positions.

Heading Into the Jobs ​Report

A plethora of employment data points this ⁢week supported concerns that the⁢ labor ⁣market is cooling.

The number of job openings in July fell to 8.827 million, down from 9.165 ⁤million in ‍June and below the market estimate of 9.465 million. This is the first time that job openings were below‍ 9​ million since March 2021 and represented ⁢the third‍ consecutive monthly decline.

Job quits edged lower,‌ sliding by​ 253,000 to 3.549 million in June.​ This was the lowest reading since ‍February 2021.

Layoffs surged in ​August as ‍U.S.-based firms announced 75,151 job cuts, the largest figure in three months, according ⁣to a report published⁢ by Challenger, Gray & Christmas, Inc. In the first eight months of ⁢2023, there have been more than 557,000 layoffs.

“Job openings are falling, and American workers⁢ are more reluctant to leave their positions right now. The job market is resetting after ‌the pandemic and post-pandemic hiring frenzy,” said Andrew ⁢Challenger, senior vice president of the​ employment firm,⁤ in a statement.

ADP reported (pdf) that⁣ private U.S. businesses‌ hired 177,000 employees in August, the smallest total in five months.

This could be ‌a sign that the national economy is returning to the way it was before the coronavirus pandemic, says Nela Richardson, the‌ chief economist at ADP.

“After two years of exceptional gains tied to the ‌recovery, we’re moving toward more sustainable growth in pay and employment as the economic effects⁤ of the pandemic recede,” said Ms. Richardson.

Initial jobless claims eased (pdf), totaling 228,000 for the week ending Aug. 26. This was down ⁢from the previous week’s‍ 232,000 and below the consensus estimate of 235,000. Continuing jobless⁢ claims increased to⁢ 1.725 million,‍ while the four-week average ⁤was roughly unchanged at 237,500.

Impact on the⁣ Federal Reserve

The latest labor data might prove ‍to be good news for the Federal Reserve.

Speaking at the central bank’s annual Jackson Hole ⁤economic symposium ​on Aug. 26, Fed Chair⁣ Jerome Powell noted ‍that softer labor market conditions are needed to achieve the institution’s 2 percent inflation target rate.

“Reducing ‌inflation is likely to require a ⁣sustained period of ‌below-trend growth.⁤ Moreover, there will very likely be some softening ‌of ‌labor market ​conditions,” ⁣Mr. Powell said in his keynote address. “While‍ higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some‌ pain to households and businesses. These are the unfortunate costs of reducing inflation. But a fa