The Jobs Report – August 2023

Highlight

In August, the economy added 187K jobs, slightly ahead of expectations of 170K. Private payrolls added 179K jobs. The prior two months were revised down by a combined 110K jobs. Downward revisions have been the pattern for much of this year. The three-month average declined to 150K as the trend in job growth continues to slow. Year-over-year growth is 2% for total payrolls and for private payrolls. This is less than half of the growth rate from last year. 

What you need to know:

• The unemployment rate increased from 3.5% to 3.8%. The household survey showed an increase of 222K jobs and an increase of 736K people in the labor force. This is the highest unemployment rate since February 2022. However, a beneficial offset was a 0.2% increase in the labor force participation rate.
• The sector with the largest increase in employment was education and health services at 102K. Transportation lost 34K, continuing the losses from prior months.  A large bankruptcy in that sector this summer contributed to the losses. Notable also is the continuing losses in temporary jobs. That sector lost 19K jobs in August bringing the yoy rate to -5.9%. Changes in temporary jobs are often a leading indicator of conditions in the overall job market.
• Average hourly earnings were firm, growing at 4.3% yoy. Workers are now seeing real wage gains after a long series of real wage losses.  
• Overall, the employment report shows that the Fed’s rate hikes continue to work their way through the economy, slowing employment growth. This report should be welcome news to the Fed as it shows their policy actions are performing their role by cooling the labor market and relieving a potential inflationary threat.