The number of jobs added by the United States in the month of August was not expected, amid the high Federal Reserve Rates.
Nonfarm payrolls increased by 187,000 for the month of August. What do nonfarm payrolls indicate? Well, they signal the number of jobs in the country. The estimate was 170,000, as reported by the U.S. Bureau of Labor Statistics.
The rate of unemployment, however, was 3.8%. The increase has been the highest since February 2022. The labor force participation rate hiked to 62.8%, which is the highest since the year 2020 (Feb 2020), just prior to the Covid pandemic.
The average hourly earnings have escalated by 0.2 percent for August. The forecast was, however, 0.3 percent.
Jobs in the various sectors
The healthcare sector got the biggest chunk, with an additional 71,000. The social assistance sector got 26,000 extra jobs. The construction sector got 22,000 jobs added. Moreover, 40,000 jobs were added in leisure and hospitality.
However, on the contrary, the warehousing and transportation sectors lost 34,000. The information sector also declined by 15,000.
The nonfarm payrolls growth defied expectations. However, the counts of July were lower.
The earlier estimates
The estimates for July declined from 157,000 to 30,000. For June, they were revised lower from 105,000 to 80,000. This has been the smallest monthly gain since the last months of 2020.
The rolls of unemployed have risen by 514,000. The increase in the unemployment rate has been unexpected, Of the employed population, the household count has risen by 222,000.
A mixed view can be seen from recent data. The overall growth stands at a steady pace because while the customers are spending, the labor market is getting loose.
For instance, in the month of July, the job openings declined to 8.83 million. While this number is above the pre-Covid times, this is still the lowest since March 2021. In simple terms, this meant 1.5 job openings for every unemployed.
On the other hand, personal consumption expenditure prices increased just 0.2 percent in the month of July, However, in the month of August, the consumer spending was robust, as it rose to 0.6 percent, as reported by the Commerce Department.
It was also reported by the Commerce Department that an increase of 2.1 percent annualized rate was seen in the gross domestic product for the second quarter. This level is below the initial estimate of 2.4 percent but is still more than what the Fed thought.
The Atlanta Fed, however, is analyzing GDP growth for the third quarter at a strong pace of 5.6 percent. This would be far different from the prior expectation that said that the economy may be touching a shallow recession after hikes in the Fed interest rates.