Total nonfarm payroll employment increased by 142,000 in August while the unemployment rate ticked down 10 basis points month-over-month to 4.2%, according to the U.S. Bureau of Labor Statistics (BLS).
The latest jobs report is in line with expectations and means a rate cut is likely in store from the Federal Reserve Open Market Committee at the September meeting.
“While job growth ticked up to 142,000 jobs in August, June and July were revised downward by 86,000 jobs total, indicating that job growth has moderated over the past several months,” says Sean Fergus, executive director of economic research for Zonda. “Additionally, the unemployment rate ticked down slightly from 4.3% to 4.2%, but is still over 4.0% and higher than 3.8% a year ago.”
Taking the August figures and June and July revisions into account, Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA), says job growth has slowed to an average of 116,000 over the past three months.
“That is likely not enough to keep the unemployment rate from rising further,” Fratantoni says. “It was little changed at 4.2% in August, but we do expect it will increase over the next year, perhaps getting as high as 5%.”
The number of unemployed people in August was 7.1 million, higher than the 6.3 million people unemployed in August of 2023. The number of long-term unemployed—those jobless for 27 weeks or more—was relatively unchanged at 1.5 million and accounted for 21.3% of all unemployed people.
The labor force participation rate remained at 62.7% in August and has changed very little over the year. The employment-population ratio also was unchanged in August at 60.0%. Over the past 12 months, average hourly earnings have increased by 3.8%, according to the BLS.
“Federal Reserve officials have recently pivoted away from a primary focus on inflation to a more balanced view, with concerns both about inflation and employment,” Fratantoni says. “This report highlights that such a pivot makes sense, and that a 25-basis point cut at its September meeting is a sensible first step at this time.”
Among sectors, job growth was most significant in the construction sector (+34,000) and health care sector (+31,000). Employment declined most significantly in the manufacturing sector in August, falling by 24,000.
