US hiring rises unexpectedly but labour market shows signs of cooling

WASHINGTON - Hiring in the United States logged a surprise jump in August, government data showed on Friday, but unemployment rose to its highest level since early 2022 as the economy showed signs of cooling.

The world’s biggest economy added 187,000 jobs last month, according to the Labour Department, but wage growth slipped and

the jobless rate climbed to 3.8 per cent.

The uptick in job gains came as employment figures for June and July were both revised downwards, and the numbers overall signal a steady pace of hiring while the labour market shows signs of easing.

Policymakers have been struggling to lower demand and rein in stubborn inflation, with the Federal Reserve lifting interest rates rapidly – recently bringing them to the highest level in more than two decades.

But the central bank has also vowed to be data-dependent in its upcoming decisions.

Meanwhile, a relatively strong labour market has added to hopes that the United States can bring inflation down without tipping the economy into a recession.

On Friday, Labour Department data showed that average hourly earnings in August rose 0.2 per cent, slower than the month before.

While the jobless rate has risen, this came on the back of a 0.2 percentage point increase in the labour force participation rate – after being flat since March.

And the number of “new entrants” among the unemployed, referring to people with no prior work experience, edged up as well, according to Friday’s report.

“Payroll employment increased in August, but with the markdowns in the rate of job growth for June and July noted in this report, the cumulative effect is a noticeable slowdown in the job market,” said Mr Mike Fratantoni, chief economist of the Mortgage Bankers Association.

“Job gains are now averaging only 150,000 over the past three months,” he added.

The Labour Department noted that employment continued a trend upwards in healthcare, leisure and hospitality, social assistance, and construction.

Employment in transportation and warehousing, meanwhile, fell.

“A slowing in wage pressures and rising participation are encouraging,” said chief US economist Rubeela Farooqi of High Frequency Economics.

This confirms “softening in labour market conditions”, which is what Fed officials are looking for as they mull over the need for further rate hikes.

Should data points continue to show a slowdown in the economy, they could support the case for a halt in further interest rate increases during the Fed’s September meeting, analysts said.

AFP