According to data released Friday by the Labor Department, the United States added 187,000 jobs in August. The unemployment rate rose by three tenths to 3.8%, moving away from its lowest point in half a century. The world’s largest economy has seen 32 consecutive months of job creation, with more than 13.7 million new jobs added. The U.S. economy is showing insufficient signs of slowing following aggressive interest rate hikes approved by the Federal Reserve to combat inflation, but is at a crossroads where the direction ahead is unclear.
Analysts expected 170,000 jobs to be created and an unemployment rate of 3.5%. Paradoxically, unemployment has risen despite more jobs being created than expected. Employment in the United States is measured using two surveys, some of which provide somewhat contradictory data. The business survey is most commonly used to measure job creation. On the other hand, the unemployment rate is calculated using the household survey, which also includes the labor force in its measurements.
In this case, both reflect strong employment growth of around 200,000 jobs. The increase in the unemployment rate is due to a sharp increase in the labor force by 736,000 people this month, causing the number of unemployed to increase by more than half a million and the unemployment rate as of February reaching the highest level since February last year.
The 187,000 jobs created are below the average of 271,000 jobs per month last year. However, once the data for June (from 185,000 to 105,000 jobs created) and July (from 187,000 to 157,000) are revised downwards, they suggest an acceleration that no one expected. Health was the main driver of employment, along with hospitality and leisure. Outpatient health services, nursing centers, and residential homes and hospitals added a combined 72,000 jobs, while the leisure and hospitality sector added 40,000 employees. The actors’ strike and a strike by transport companies led to a decline in employment in these sectors.
In August, average hourly wages for nonfarm private sector workers rose 8 cents, or 0.2%, to $33.82. Over the past 12 months, the increase is 4.3%, in line with forecasts but above what policy makers want to prevent inflation from taking hold in the economy in a downward spiral. Prices-wages.
When Federal Reserve Chairman Jerome Powell said at the symposium in Jackson Hole, Wyoming, a week ago that the next steps in monetary policy would be taken “cautiously,” he reinforced the idea that the U.S. meeting would be “cautious.” -The central bank will give a break. September 20th. Of course, Powell also made it clear that inflation remains “too high” and that the central bank is prepared to raise interest rates further from the current level of 5.25% to 5.5%, making it clear that a further increase of 0 25 points are possible will be on the table at the meetings in November or December.
Although the Federal Reserve attaches great importance to the development of the labor market, this Friday’s data does not seem to be able to change these plans, as do others that emerged during the week that suggest that the economy is slowing down more convincing than Powell would have liked.
On the one hand, the Department of Commerce has revised downwards its estimate of the development of the gross domestic product in the second quarter. While growth was previously estimated at an annual rate of 2.4% (0.6% quarterly), it is now at 2.1% (0.5% quarterly).
On the other hand, job vacancies fell to 8.8 million last month, the Labor Department reported Tuesday, the lowest since March 2021 and below the revised 9.2 million in June. also a decrease of 9.6 million. However, the figure is still high and means that for every unemployed person there are 1.5 vacancies.
The number of people quitting their jobs also fell to 3.5 million, the lowest level since February 2021, but again the decline is due to extremely high levels during the pandemic, which led to the phenomenon being dubbed “the “big resignation” was called. Of course, the general consensus is that finding a job isn’t as easy as it was a few months ago.
On the other hand, a closely watched price trend figure tied to personal spending rose from 3% to 3.3% in July, another sign that the battle against inflation is not won, as Powell and other Fed members say That’s what the central bank’s monetary policy committee made clear in Jackson Hole last week.
After adding more than 100,000 jobs in 32 consecutive months, United States President Joe Biden is trying to convey the message that the economy is doing well, but citizens worried about the surge in inflation are not very convinced. He has called a performance this Friday to reinforce his optimistic message.
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