The U.S. labor market continued to signal a soft landing as non-farm payroll increased by 187,000 as described in the August U.S. Bureau of Labor Statistics (BLS) report, roughly in line with analysts’ expectations. Today’s gain indicated a gradual slowing in hiring compared to the average job gain of 271,000 jobs in the past 12 months. Adding fewer jobs may take pressure off the Federal Reserve to raise interest rates further.
The unemployment rate, at 3.8 percent, ticked up by 0.3 percentage point, and the number of unemployed persons increased by 514,000 to 6.4 million adding further signs of a moderating jobs market.
“Over the past few years, talent managers have been endlessly discussing the impact of a changing work environment. Clients and candidates have focused on the new hybrid workplace, the impact of technology and the changing attitudes and behaviors of various demographic cohorts like Millennials and Gen Xers. Today’s BLS data might signal a pause in those debates and the beginning of a focus on the fundamentals that have traditionally driven the executive, technical, professional and managerial hiring workplace for decades,” said Nancy Halverson, vice president of operations for MRINetwork. “As your organization brings on new talent in a challenging economic environment, focus on these tried-and-true fundamentals. Build and maintain a positive workplace culture, ensure new talent aligns with that culture, evaluate new hires not only on their work history but on skills-based criteria, and once on board, drive engagement.”
WSJ Reporter, Gwynn Guilford, noted that the reduced hiring this summer and rise of unemployment in August are both signs the labor market is cooling in the face of high interest rates. “Falling demand for workers that loosens the labor market without triggering mass layoffs is the ideal outcome for the economy, and that outlook looks increasingly possible,” said Luke Tilley, chief economist at Wilmington Trust Investment Advisors. “We have a slower economy, and that is weighing on job growth, but it’s still pretty strong,” he said. “That is going to be the key to a soft landing, because consumers aren’t going to cut back in a massive way and retrench if we continue to have net job growth.” A soft landing is the outcome in which the economy cools enough to control inflation without plunging into a recession.
CNBC reporter Pia Singh added context to today’s report noting, “The jobless rate was expected to be 3.5%, according to economists polled by Dow Jones, equal with what it was in the prior month. Average hourly earnings rose 0.24% for the month, or 4.29% year-over-year. That was less than the 4.4% increase expected by economists. The unemployment rate jumped to 3.8% in August, while wages rose less than expected, the U.S. Department of Labor said Friday, signs of a slowing economy and easing pricing pressures.”
In August, healthcare added 71,000 jobs, following a gain of similar magnitude in the prior month. Over the month, job growth continued in ambulatory healthcare services (+40,000), nursing and residential care facilities (+17,000), and hospitals (+15,000).
Employment in leisure and hospitality continued to trend up in August (+40,000). The industry had gained an average of 61,000 jobs per month over the prior 12 months. Employment in the industry remains below its pre-pandemic February 2020 level by 290,000, or 1.7 percent.
Construction employment continued to trend up in August (+22,000), in line with the average monthly gain over the prior 12 months (+17,000).
Transportation and warehousing lost 34,000 jobs in August. Employment in truck transportation fell sharply (-37,000), largely reflecting the bankruptcy of a large trucking firm.
Employment in professional and business services changed little in August (+19,000) and has shown essentially no net change since May. Professional, scientific, and technical services employment continued to trend up over the month (+21,000). In contrast, employment in temporary help services continued to trend down (-19,000) and has declined by 242,000 since its peak in March 2022.
Information employment changed little in August (-15,000). Within the industry, employment in motion picture and sound recording industries decreased by 17,000, reflecting strike activity.
Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; financial activities; other services; and government.
Halverson also noted, “Engaged employees perform better and move critical business metrics. Yes, the challenges of hybrid work, new technologies and different generational attitudes can create a noisy background, but the real drivers of growth are engaged, aligned and driven top performers.”
To view the entire Employment Situation report from the U.S. Bureau of Labor Statistics, click here.