US jobs surge in August, unemployment rate holds steady
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Non-farm payrolls in the US surged by 162,000 jobs in August, beating forecasts.
PHOTO: REUTERS
- US job growth surged by 162,000 in August, with unemployment steady at 4.1 per cent, indicating a stable labour market.
- Wage growth slowed to 3.1 per cent year-on-year, the slowest since the pandemic.
- The strong jobs report keeps a Federal Reserve rate hike in September possible, despite cooling inflation concerns and rising mortgage rates impacting housing.
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WASHINGTON – US jobs growth accelerated sharply in August while the unemployment rate held steady at 4.1 per cent, pointing to a still-stable labour market and keeping an interest rate hike from the Federal Reserve in September on the table.
Non-farm payrolls surged by 162,000 jobs in August after an upwardly revised rise of 21,000 in July, the Labor Department’s Bureau of Labor Statistics (BLS) said in its closely watched employment report on Sept 4.
Economists polled by Reuters had forecast payrolls would increase by 56,000 after a previously reported drop of 23,000 in July.
Estimates ranged from as low as a loss of 25,000 jobs to as high as a gain of 121,000.
Wage growth continued to cool in August, with average hourly earnings rising 3.1 per cent compared with a year earlier. That was the slowest pace since the depths of the pandemic, and lower than the inflation rate.
Despite signs in the spring that hiring was gaining momentum, there were concerns that the labour market was reverting to a ho-hum state.
Job openings and the rate of hiring have stalled, even as layoffs remain exceedingly low.
The latest report, however, is an encouraging sign that the fragile labour market may be on sturdier footing.
The new data will be a boon for US President Donald Trump, whose Republican Party is facing a stern test from Democrats in upcoming midterm elections in November, with the state of the world’s largest economy a key issue for voters.
Restaurants and bars added 59,000 jobs, well above the average gain of 12,000 over the last year, the BLS said.
Employment in the local government education sector, which is mostly made up of public schools, increased by 42,000, largely offsetting a decrease from the previous month due to summer holidays. Overall employment in the sector has shown little net change since January.
The healthcare sector, one of the major drivers of jobs growth in the US as the population ages, added 13,000 jobs, a slower expansion than its average over the last year.
Construction and manufacturing also made gains in August, the data showed.
The information technology sector, however, lost 23,000 jobs, with cuts in computing infrastructure, data processing and web hosting. Job losses in the sector have averaged around 8,000 per month for the last year, according to BLS data.
Ahead of the employment report, financial markets dialled back rate hike expectations after Fed governor Christopher Waller said on Sept 3 that he was inclined to argue in favour of keeping rates steady in September if upcoming data confirmed inflation pressures were cooling off.
Financial markets saw a roughly 52 per cent chance of a rate hike at the Fed’s Sept 15 to 16 meeting, down from 63.2 per cent on Sept 2, according to CME’s FedWatch tool.
Concerns about inflation and lack of forward guidance from the Fed have helped to boost US Treasury yields, which economists see as a problem for the central bank.
Rising yields drove the 30-year fixed mortgage rate to a more than one-year high of 6.71 per cent this week, data from mortgage finance agency Freddie Mac showed on Sept 3, which could further undermine a struggling housing market. REUTERS