After an unexpectedly bad jobs report in July, employers added a whopping 162,000 jobs in August according to the Bureau of Labor Statistics. Economists had forecast around 50,000 new jobs.
Chart: Carson Elm-Picard / MS NOW; Source; Beauru of Labor Statistics
While this headline will get the most attention, revisions to previous months have indicated where the labor market is headed, and that is looking better this month. This summer there were 55,000 more jobs created than last reported.
In the spring there was hope that hiring was improving, but over the summer, the number of jobs created steadily declined. Today’s number, along with the revisions, will have many economists asking if this is a one-time event or the sign of a trend.
In July, there was a large drop in hiring by local governments for educational and teaching jobs, which makes sense as it was the middle of summer. In August, that loss was largely reversed.
One note of caution, revisions to previous months have been quite extreme and it’s possible a month from a now, heading into the midterm election, this surprisingly large increase could be revised downwards.
The unemployment rate held steady at 4.1%. While that might sound good, it might be for the wrong reasons. To be considered unemployed, people have to be actively looking for work. But for nearly a year, there’s been a steep drop off in the labor force participation rate which suggests people are leaving the workforce and economists aren’t sure why. There was a slight increase in August, but it is still lower than expected.
To be considered unemployed, people have to be actively looking for work. But for nearly a year, there has been a steep drop-off in the labor force participation rate, which suggests people are leaving the workforce entirely. Economists are not sure why. It could be more people retiring, especially after recent record highs in the stock market boosted retirement savings. Or it could be that the administration’s anti-immigration and deportation policies are keeping people out of the workforce. AI has taken over some tasks that were filled by workers, and it might be for statistical reasons, as well.
