As expected, the U.S. labor market grew in August as more people are entering the workforce, which in turn pushed the unemployment rate up. A total of 315,000 new jobs were added which was higher than the expected 298,000 for the month. The labor force participation rate in August also registered a notable climb from 62.1% in July to 62.4% in August, which was the highest level since March 2020.
Higher Consumer Prices This Summer Causing The Hike
The larger-than-expected rate hikes by the Federal Government trying to cool the economic growth and fight inflation are the likely causes of this surge in the labor market. In a speech last week in Jackson Hole, Federal Reserve Chair Jerome Powell said, “The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers.” Powell, however, suggests it might be necessary for “some softening” of the labor market to bring down the inflation rate to the Federal goal of 2%, as of July, the current inflation rate sits at 8.5% year-over-year.
Which Job Sectors Are Trending Up Or Down?
The standout from the August report was the retail sector, adding almost 44,000 new jobs, a gain of 22,000 from July. One of the sectors that led the charge for gains, however, was the professional and business services sector, which added 68,000 new jobs in August. It continued to trend well above its February 2020 production with most of these new jobs coming in computer systems design and related services, management and technical consulting services, architectural and engineering services, and scientific research and development services.
A notable industry that gained fewer jobs in August than in the previous month, was the leisure and hospitality sector, with 31,000 jobs added which was down drastically from the 96,000 gain in July. This sector was averaging around 90,000 new jobs per month when the lifting of COVID restrictions drove consumer demand for dining, lodging, and other in-person activities.
Wrap Up
It is always nice to see more and more jobs getting created as the country seems to be moving towards a more normal, pre-pandemic lifestyle. Citizens are getting back into work and the unemployment rates have improved drastically year after year since 2020.