Total U.S. jobs

U.S. Employment Growth Continued to Slow in August

Nonfarm payroll job growth rose by 142,000 workers in August, somewhat below the expected gain of around 160,000. In addition, the U.S. economy added 118,000 and 89,000 employees in June and July, respectively—each a downward revision, with 86,000 fewer workers added to nonfarm payrolls in total than previously thought. Overall, these data show that U.S. employment growth continued to slow in August. Over the past 5 months, nonfarm payrolls increased by 134,600 on average each month, down from 254,800 in the 5 months prior to that.  

These data have been closely watched to see how the labor market situation might impact monetary policy. The Federal Open Market Committee is almost certainly going to reduce short-term interest rates at its September 17–18 meeting by at least 25 basis points. The continued slowdown in the economy has many analysts seeking a reduction by 50 basis points at the next Federal Reserve meeting, but this data point is not likely to shift the thinking on a larger cut one way or the other by much. The key to getting a 50 basis-point decrease in the federal funds rate will likely hinge on other data points between now and then. Beyond the next meeting, the FOMC also meets on November 6–7 (just after the U.S. election) and December 17–18, with further cuts anticipated.

On the positive side, U.S. job growth remains positive, increasing for 44 consecutive months, adding 16.3 million employees in that period. Total U.S. nonfarm payroll employment stood nearly 6.5 million (or 4.2%) above the February 2020 pre-pandemic peak, rising to a new record level: 158.8 million

The unemployment rate inched down from 4.3% in July, the highest since October 2021, to 4.2% in August. It was the fourth straight month with an unemployment rate of 4% or higher. The number of unemployed individuals rose edged down from 7,163,000 to 7,115,000. At the same time, the labor force participation rate remained at 62.7%. 

Average hourly earnings for production and nonsupervisory workers among private sector workers rose 4.1% over the past 12 months, the fastest year-over-year pace since March. With that said, average hourly earnings have largely trended lower since peaking at 7.0% in March 2022. 

Job growth in August was led by gains in private education and health services, leisure and hospitality, construction and local government. Eating and drinking places added 29,900 workers in the month. Manufacturing, retail sales and information experienced notable declined in employment for the month. Overall, the private sector added a net 118,000 jobs in August, while government employment increased by 24,000, mainly from local governments. Here is a breakdown of the employment growth in August by sector (ranked from highest to least): 

  • Private education and health services (up 47,000)
  • Leisure and hospitality (up 46,000, with eating and drinking places up 29,900)
  • Construction (up 34,000)
  • Local government (up 22,000)
  • Financial activities (up 11,000)
  • Professional and business services (up 8,000)
  • Trade, transportation and utilities (up 2,000, with retail sales down by 11,100)
  • Federal government (up 1,000)
  • State government (up 7,000)
  • Other services (up 1,000)
  • Mining and logging (unchanged)
  • Information (down 7,000)
  • Manufacturing (down 24,000)

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