Hiring up, unemployment down in August jobs report

Following unexpectedly dismal July tallies that sparked fears of an economic slowdown, Friday’s jobs report from the Labor Department finds hiring moved up in August as the U.S. unemployment rate ticked down.

Total non-farm payroll employment increased by 142,000 in August, up from July’s 117,000 and the unemployment rate edged down to 4.2% from last month’s 4.3% rate, according to Friday’s Employment Situation Summary from the U.S. Bureau of Labor Statistics. Hiring increases in the construction and health care industries helped drive the latest jobs data.

The overall number of unemployed U.S. workers stayed relatively steady month-over-month at 7.1 million in August, but it is up significantly from this time last year when around 6.3 million workers were jobless and unemployment registered at 3.8%, reflecting continued slowing but ongoing growth in the jobs sector.

A Labor Dept. report on job openings earlier this week found U.S. companies were posting new jobs at a slightly slower pace in August than in July while still maintaining a brisk hiring rate, adding 5.5 million new positions in August.

This week’s data is likely to bolster an expected interest rate reduction decision by the Federal Reserve when it meets later this month.

Becky Frankiewicz, North American president of the staffing firm ManpowerGroup, told The Associated Press that many U.S. employers are currently in wait-and-see mode ahead of both the Fed’s policy meeting and the upcoming presidential election.

“There’s a whole world waiting to see what happens with our election,” Frankiewicz said. “We have this great waiting game. No one wants to make big moves yet.”

Frankiewicz also noted the current jobs and employment data reflects a steadying employment market.

“The bottom isn’t falling out, and we’re not seeing a rocket ship,” she said. “It’s stability.”

At an annual meeting of global central bankers in Jackson Hole, Wyoming, late last month, Federal Reserve Chairman Jerome Powell sent his strongest signal yet that the monetary body is ready to start making reductions to its benchmark federal funds rate, which has stood at a two-decade high since July 2023.

“The time has come for policy to adjust,” Powell said. “The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”

Should the Fed make a downward adjustment at its policy meeting scheduled for Sept. 17-18, it would mark the first reduction in over four years and the start of a reversal to one of the most aggressive strategies undertaken by the U.S. central bank aiming to quash inflationary pressures fueled by unprecedented economic impacts of the COVID-19 global health crisis.

The Fed’s overnight intra-bank lending rate has stood at 5.25% to 5.5% since last summer and is the highest in 23 years after a series of 11 straight increases levied earlier by the monetary body in its efforts to cool off a U.S. economy that was running red-hot amid the pandemic recovery.

The Fed’s two-part policy mandate of supporting price stability and maximum employment has been skewed heavily toward the inflation metric for the last few years but the recent labor market slowdown has, as Powell noted in his comments following the bankers’ summit, pushed the monetary body’s focus to the jobs side of responsibilities.

“The unemployment rate began to rise over a year ago and is now at 4.3%,” Powell said. “Still low by historical standards but almost a full percentage point above its level in early 2023. Most of that increase has come over the past six months. So far rising unemployment has not been the result of elevated layoffs, as is typically the case in an economic downturn. Rather the increase mainly reflects a substantial increase in the supply of workers and a slowdown from the previously frantic pace of hiring.”

“We don’t seek or welcome further cooling of labor market conditions,” Powell said.

At the state level, Utah’s unemployment rate has also been on the rise, though it’s tracking at a much lower rate than the national average. The latest data from the Utah Department of Workforce Services found the state’s unemployment rate came in at 3.2% in July, up two-tenths of a percent from June.