America’s employers slowed their hiring in August in the face of rising interest rates, high inflation and sluggish consumer spending but still added 315,000 jobs. And NCSU economist Dr. Mike Walden says more people are wanting to work, the result being an increase in the national unemployment rate.
America’s employers slowed their hiring in August in the face of rising interest rates, high inflation and sluggish consumer spending but still added 315,000 jobs. And NCSU economist Dr. Mike Walden says more people are wanting to work, the result being an increase in the national unemployment rate.
The jobless rate rose to 3.7% from 3.5% despite the addition of the new jobs.
“Job creation by businesses slowed in August, but was still a substantial 315,000, down from the more than 500,000 in July,” Walden tells WRAL TechWire. “Then how did the jobless rate rise from 3.5% to 3.7%?
“It’s because there was a surge in labor force participation of over 700,000 people. This may be because more people are comfortable going back to the labor market, or it may be because the impact of higher inflation tightening household budgets is causing more people to seek jobs. ”
The government reported Friday that last month’s job gain was down from 526,000 in July and below the average gain of the previous three months.
Walden does expect growth in jobs to continue to slow.
“With the Fed saying interest rates will continue to rise, it’s likely the job market will continue to slow. The big question is, will it slow enough such that we will ultimately see aggregate job reductions,” he says.
Even though the job gain declined from July, the report still pointed to a resilient labor market and an economy that is not near recession. The number of people looking for work jumped last month, which boosted the unemployment rate because not all of them found jobs immediately. The influx of job seekers may help employers fill a near-record number of openings in the coming months.
The smaller August gain will likely be welcomed by the Federal Reserve. The Fed is rapidly raising interest rates to try to cool hiring and wage growth, which have been consistently strong. Businesses typically pass the cost of higher wages on to their customers through higher prices, thereby fueling inflation.
