The labor market still looks strong and not recessionary but continues to cool. The unemployment rate increased as hundreds of thousands of new and previously discouraged workers joined the labor market seeking new employment opportunities. The pressure to raise wages diminished in August due to increased job seekers and decreased open jobs. Supply and demand appear more balanced as the pandemic’s hardest-hit sectors continue to make gains and we approach full employment.
The Numbers*:
- The U.S. economy added 187,000 jobs in August, higher than the Dow Jones 170,000 prediction.
- +187,000 jobs, while strong, continued a downward trend from the 12-month average of 271,000 jobs added.
- The unemployment rate increased 0.3% to 3.8%. The number of unemployed increased by 514,000 to 6.4M.
- Since the onset of the pandemic in April 2020, this has been the biggest increase.
- It was due not to layoffs or other negative forces but to a significant increase (736,000) in the number of people joining/rejoining the market and looking for a job.
- From July to August, average hourly earnings rose 0.2% or 8 cents, the smallest increase since February 2022.
- Wages remain 4.3% higher than they were at the same time last year.
- The increase was below forecasts and could indicate that inflation pressures are easing.
- The number of job openings decreased to 8.8M.
- 6.37M workers are looking for a job, changing the ratio of open jobs to job seekers to 1.38 to 1.
- The ratio is still well above pre-pandemic levels, but the market is cooling.
- At the height of the post-pandemic job market, the ratio of available jobs to job seekers was nearly 2 to 1.
- The number of hires and total separations decreased slightly to 5.8M (3.7%) and 5.5M (3.5%) respectively.
- Within the separations, quits (3.5M) decreased.
- Layoffs and discharges (1.6M) increased slightly.
- The labor force participation rate jumped to 62.8%, the highest since the pandemic.
- Many workers have stayed on the sidelines for 3.5 years but are reentering the workforce in large numbers.
- The number of jobs added in the July report was revised down by 30,000 jobs to 157,000 from 187,000, and June job gains were further revised down from 185,000 to 105,000.
Industry Trends:
- Health Care had the largest gains this month, adding 71,000 jobs.
- Leisure and hospitality surged from +17,000 jobs last month to +40,000 in August.
- There were also gains in social assistance (+26K) and construction (+22K).
- Transportation and warehousing shed 34,000 jobs in August, driven by Yellow. With the 99-year-old trucking corporation closed its doors, 30,000 workers, including 22,000 union workers, were laid off.
- Information jobs fell by 15,000.
- The entertainment industry continued to shrink due to the ongoing writer and actor strikes that have shut down most productions.
Interesting Changes:
Most gains in August came from the private sector. The government added just 8,000 jobs. In addition, prime-age employment remained flat at 80.9%. Labor force participation gains were primarily from the under-25 group, with additional gains with women over 55 and immigrants. Immigrants are joining the U.S. workforce at much higher levels than normal as the U.S. continues to grapple with retiring Boomers and a historically tight labor market. Between January 2020 and July 2023, the immigrant labor force grew by 9.5% compared to a 1.5% native-born growth rate.
According to a new study from the Federal Reserve Bank of San Francisco, this quarter (Q3), Americans will likely run out of savings accumulated during the pandemic. Excess savings peaked at $2.1 trillion in August 2021, but as of June 2023, there is less than $190 billion in aggregate excess savings. The decrease in savings could add to the new surge of job seekers. Many economists disagree, stating that wage growth is now outpacing inflation and the need for savings is becoming less important.
Get the latest Jobs Report:
* Above represents August 2023 Data
Sources:
- https://www.axios.com/2023/08/29/us-economy-immigration-labor
- https://www.bls.gov/news.release/jolts.nr0.htm
- https://www.bls.gov/news.release/pdf/empsit.pdf
- https://www.cnbc.com/2023/09/01/jobs-report-august-2023.html
- https://www.cbsnews.com/philadelphia/news/yellow-corp-news-today-trucking-company-bankruptcy-layoffs/
- https://www.cnn.com/2023/09/01/economy/jobs-report-august-final/index.html
- https://www.employamerica.org/blog/labor-market-recap-august-2023-how-much-slowing-is-left/
- https://www.federalreserve.gov/monetarypolicy/beigebook202307.htm
- https://www.foxbusiness.com/economy/us-jobs-report-august-2023
- https://thehill.com/business/4183069-5-things-to-know-about-the-august-jobs-report/
- https://www.jpmorgan.com/insights/outlook/economic-outlook/unemployment-rate-rises-despite-steady-payroll-gains
- https://www.washingtonpost.com/business/2023/09/01/jobs-report-we-may-finally-be-witnessing-a-normal-labor-market/d84cb898-48e2-11ee-b76b-0b6e5e92090d_story.html
- https://finance.yahoo.com/news/august-jobs-report-shows-pace-164146168.html
