WASHINGTON — U.S. employers added a stronger-than-expected 162,000 jobs in August while the unemployment rate held steady at 4.1%, providing fresh evidence of resilience in the labor market and potentially strengthening the case for the Federal Reserve to raise interest rates later this month.
The Bureau of Labor Statistics reported Friday that nonfarm payroll growth accelerated sharply from the previous two months. June and July employment also was revised higher by a combined 55,000 jobs, further improving the picture of a labor market that had appeared to be losing considerable momentum.
The August increase was more than double the 65,000 jobs economists surveyed by FactSet had expected.
The stronger report could have significant implications for the Federal Reserve, which has been weighing persistent inflation against signs of slowing economic growth as it considers its next move on interest rates.
“Employers added more jobs than anticipated in August, and upward revisions to the prior two months lift the three-month average to a healthier pace than the summer numbers had suggested,” America’s Credit Unions Senior Economist Dawit Kebede said in a statement. “A strong job report strengthens the case for a September rate increase, especially if next week’s CPI reading does not show clear signs of cooling,” Kebede said. “For credit unions, that means continued pressure on funding costs, but also a labor market that is supporting members’ ability to keep up with their obligations.”
Previous Months Revised Higher
The revisions were substantial, particularly for July.
BLS revised June payroll growth upward by 11,000 jobs, from 20,000 to 31,000. July was revised upward by 44,000, changing the previously reported loss of 23,000 jobs into a gain of 21,000.
Combined with August’s 162,000 increase, employers added 214,000 jobs over the past three months, or an average of approximately 71,000 per month.
While that remains relatively modest by historical standards, it paints a considerably stronger picture than the initial June and July reports had suggested.
August’s gain also was well above the average monthly increase of just 31,000 jobs during the previous 12 months, according to BLS.
Restaurant, Education Jobs Lead Gains
Hiring remained concentrated in several industries.
Food services and drinking places added 59,000 jobs, significantly above the industry’s average monthly increase of 12,000 during the previous year. Local government education added 42,000 jobs, although BLS said that increase largely offset a decline in July.
Manufacturing employment continued to trend higher, adding 16,000 jobs in August and 58,000 since reaching a recent low in December. Health care employment increased by 13,000, although that was below its average monthly gain of 32,000 during the previous 12 months.
Information was a notable weak spot, shedding 23,000 jobs. Losses included 8,000 positions among computing infrastructure providers, data processing, web hosting and related services; 7,000 in publishing; and 5,000 among broadcasting and content providers.
Employment in financial activities showed little change during August, BLS said.
Unemployment Holds at 4.1%
The unemployment rate remained at 4.1%, with approximately 7 million people unemployed.
The labor force participation rate increased two-tenths of a percentage point to 61.6%, as the civilian labor force grew by 683,000 people. Household survey employment increased by 569,000.
Another potentially positive indicator was the number of people working part time for economic reasons, which declined by 414,000 to 4.4 million. Those workers would have preferred full-time employment but were working reduced hours or were unable to find full-time positions.
Long-term unemployment remained elevated, however. About 1.9 million people had been unemployed for 27 weeks or longer, representing 27% of all unemployed workers.
Wage Growth Slows to 3.1%
Average hourly earnings increased 10 cents, or 0.3%, in August to $37.75.
Wages were up 3.1% from a year earlier, an important measure for Fed policymakers assessing whether labor costs are contributing to inflationary pressures. The average workweek edged up one-tenth of an hour to 34.4 hours.
The jobs report now puts additional attention on next week’s consumer price index report as Fed policymakers prepare for their September meeting.
