- The US added 187,000 nonfarm payrolls in August, more than July's revised growth.
- The unemployment rate was 3.8% in August, an increase from July's rate.
- Fed Chair Jerome Powell said in a recent speech the labor market's rebalancing "remains incomplete."
Amid back to school season, summer outings with friends or vacations, and the SAG-AFTRA strike, the labor market is strong based on recent job growth.
The US added 187,000 nonfarm payrolls in August, according to the report released by the Bureau of Labor Statistics ahead of Labor Day. That beats the gain forecasted, an estimated increase of 170,000.
July's payroll gain was revised from 187,000 to 157,000. June saw another revision. Per the latest release, it was revised from a gain of 185,000 jobs to 105,000.
While the surge in the unemployment rate may be unsettling for workers and job seekers, this jump can be explained by the increase in the labor force participation rate. This rate ticked up to 62.8%, a welcoming increase after being 62.6% for the past few months. The employment-to-population ratio stayed at 60.4%.
According to commentary from Lydia Boussour, EY senior economist, before the jobs report was published, EY believed the ongoing SAG-AFTRA strike would likely have a "noticeable impact" on August's estimates.
"The SAG-AFTRA strike and bankruptcy of long-time trucking company Yellow in August will likely create some noise in the data and point to some downside risk to the headline payroll gain," Boussour said in commentary prior to Fridays' news release from BLS. "We estimate that these two factors could potentially pose a cumulative drag on payrolls worth around 30,000-40,000 jobs in August."
These two events likely did have an impact. Motion picture and sound recording industries saw employment drop by 16,800 from July to August. Truck transportation also saw employment fall by 36,700.
Leisure and hospitality saw a job gain of 40,000 from July to August. Employment in this industry is still not quite at where it was at before the pandemic. According to Nick Bunker, economic research director for North America at the Indeed Hiring Lab, the leisure and hospitality sector has ended up transforming.
"Obviously the sector has seen a lot of wage growth," Bunker told Insider. "There's a lot of turnover and churn and quitting in that sector. And it does feel like it has been transformed by the post-pandemic recovery. And with the higher wages and just shifting attitude toward the sector, it doesn't feel like it's going to be as big a share of the labor market as it was prior to the pandemic moving forward, unless there's some other big notable change."
Average hourly earnings increased from $33.74 in July to $33.82 in August, or by 0.2%. That's a slightly softer increase than the 0.3% expected. Earnings also increased from the average a year ago, an average of $32.43 an hour in August 2022, or by 4.3%.
From wage growth to an increase in labor force participation, various data points suggest the US labor market is still strong.
"We're still seeing payroll gains continue to slow down. They're heading toward a more neutral pace," Bunker said. "Wage gains, particularly for potential workers, it's at the high end of sustainable, but it's trending downward."
Julia Pollak, the chief economist at ZipRecruiter, pointed out that employment in temporary help services declined by roughly 19,000 from July to August or by about "242,000 since its peak in March last year."
According to Pollak, this doesn't indicate a recession though given it is coming from an "unsustainable abnormal height" after companies relied partly on temporary workers to help them out after job cuts and reopening business during the pandemic.
"The decline to me looks like more of a return to normal, not the start of a recession," Pollak said.
Monthly job openings have continued to slow. There were 8.8 million job openings in July after 9.2 million in June, according to new Job Openings and Labor Turnover Survey or JOLTS data released by BLS earlier this week.
Jonathan Fisher, interim chief economist and research advisor at the Washington Center for Equitable Growth, said in commentary prior to Friday's report that "the job market appears to be cooling to a sustainable level."
"We saw in Tuesday's JOLTS that both job openings and the quit rate are falling, and these are all positive signs that we won't see unsustainable wage growth," Fisher said.
Fed Chair Jerome Powell said in his speech last week at an economic policy symposium in Jackson Hole, Wyoming, that the "rebalancing of the labor market has continued over the past year but remains incomplete."
"We expect this labor market rebalancing to continue," Powell said. "Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response."