The US added 187,000 jobs in August but the unemployment rate jumped unexpectedly, reflecting the impact of higher interest rates and the gradual slowdown of the US economy from the post-pandemic lockdown boom.
The data released by the Labor Department on Friday is the latest indication that despite weak employment, there is no sign of an imminent recession that would lead to widespread unemployment.
The unemployment rate remains low at 3.8 percent, but its rise from 3.5 percent in July was notable. Job growth figures for June and July were revised downward by 110,000 jobs, contributing to a slightly weaker picture than previously shown.
“The good news is that it’s more natural to favor workers than we’ve been used to over the past 25 years,” said Justin Bloch, assistant professor of economics at Cornell University. Moreover, he noted, stability has its own benefits: people are more likely to be part of the workforce if they feel confident they can stay there for a while.
“This is where we start to get to the point where the duration of a good job market is more important than how good it is,” said Dr. Bloch.
Much of the slowdown has come from industries returning to more typical levels after the disruptions caused by the pandemic. Exhibit A: Trucking, which evolved to cater to the wave of online home shopping, then shrank with its decline. Trucking company payroll has it flattenedwhich probably masks an outright decline given that many contract owners and operators have also retired their platforms.
The bankruptcy of Yellow, which employed about 30,000 drivers and other employees, may have accelerated this process as the amount of work available decreased.
“The truck job market has gone from very tight in 2021 and the first half of 2022 to being as loose as it was shortly after the Great Recession,” said Kenny Faith, president and senior analyst at ACT Research. “With Yellow taking more than 20,000 drivers off the market, this is the start of supply control.”
These shifts are evident in the total number of job openings per unemployed worker, which fell to about 1.5 in July from more than two in early 2022, indicating that employers’ appetite for labor is becoming almost saturated. The average number of hours worked per week has also fallen completely, as overtime becomes less important as payrolls fill up.
As the wave of employment subsides, employment growth has been reduced to a few industries that are still recovering, such as entertainment and hospitality, or poised to meet sustained demand due to structural factors in the economy, such as education and health care. Both of these jobs are disproportionately provided by immigrants and women, groups that have entered the labor market at rates that have surprised many analysts.
“At some point, you see that to some extent on the entertainment and hospitality side, those legs run out,” said Stephen Juneau, an economist at Bank of America Merrill Lynch. “Health services are structurally supported by an aging demographic, and we are just beginning to get hospital funding back to normal. Once those supportive legs are taken off, what are we left with?
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