Last week we reported on how the preliminary august job report points toward a strong economy, and now that the official numbers are here, we stand firm in that claim.
United States employers added 187,000 August jobs, showing a strong labor market despite increased interest rates from the Federal Reserve.
Last month’s job growth marked an increase from July’s revised gain of 157,000 but still pointed to a moderating pace of hiring compared with the sizzling gains of last year and earlier this year.
From June through August, the economy added 449,000 jobs, the lowest three-month total in three years. In addition, the government revised down the gains for June and July by a combined 110,000.
Friday’s jobs report also showed that wage gains are easing, a trend that may help provide reassurance that inflation pressures are cooling.
Average hourly pay rose 0.2% from July to August, the smallest such gain in a year and a half.
Measured year over year, wages last month were up 4.3% from August 2022, slightly below the 4.4% increase in both July and June.
“This month’s numbers are consistent with the pace of job creation before the pandemic,” Nela Richardson, chief economist at ADP, said in a press release. “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.”
The unfortunate findings of the reports caused investors and economists to decide on whether inflation in the United States can continue to drop down to 2% without a severe hit to the U.S. economy. Currently, both parties are split.
Labor market strength has been a key reason the economy has grown faster than many expected in 2023.
The Federal Reserve hiked rates to the highest in 22 years in July and Fed Chair Jerome Powell signaled last week that the central bank was prepared to increase federal interest rates even further later this year.
“The 187,000 gain in non-farm payrolls, jump in the unemployment rate and slowdown in wage growth in August all add to the evidence that labor market conditions are approaching pre-pandemic norms,’’ Andrew Hunter of Capital Economics wrote in a research note.
Different sectors of work saw different levels of job increases.
- Trade/transportation/utilities jobs increased by 45,000
- Information increased by 5,000
- Financial activities did not increase or decrease
- Professional/business services increased by 15,000
- Education/health services by 52,000
- Leisure/hospitality increased by 30,000
- Other 7,000
In terms of establishment size, large establishments, a business with 500 or more employees increased by 83,000 with medium and small increasing by 59,000 and 18,000 respectively.