America had another month of solid job gains: The economy added 315,000 jobs in August, while the unemployment rate ticked up to 3.7% as more workers entered the labor force, the government said on Friday.
Why it matters: Employers continue to hire workers at a robust pace, even as the Federal Reserve raises interest rates swiftly to crush inflation.
- Job growth eased from July’s breakneck pace, which were revised a tick higher to 528,000 jobs. Job growth in June was weaker than initially thought, downwardly revised by 100,000 to 293,000.
- The August figures are roughly in line with economists’ expectations.
Details: Perhaps the most welcoming piece of news in the report is the influx of workers who entered the labor force last month. The labor force participation rate — the share of people working or looking for work — rose by 0.3 percentage points, after a string of monthly declines.
- Average hourly earnings rose by 0.3%, a slowdown from the 0.5% rate in July.
The backdrop: The Fed has been bracing for some heat to come out of the labor market. It has raised interest rates at a historically rapid pace in a bid to squash elevated inflation. This report offers some good news as wage growth slowed — and more workers entered the workforce, helping ease the tightness in the labor market.
- Higher rates work to slow demand by making it pricier for consumers and companies to borrow money, causing slower economic growth and, in turn, less price pressure.
- “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” chair Jerome Powell said last week.