9/5/2022: US Job Growth Slowed in August
315K jobs were added and unemployment rate rose to 3.7%
Happy Labor Day!! I can’t believe I kept the pace of making five posts a week since July 4th. I truly enjoy writing this blog. There were a lot of events worth recording during this period. Writing helps me clarify my thoughts and form opinions on various topics. I plan to keep it up for the foreseeable future.
The August Job Report is out. 315,000 jobs were added while the unemployment rate went up 0.2 percentage point to 3.7%. The labor force participation rate increased by 0.3 percentage point over the month to 62.4% but is 1.0 percentage point below its February 2020 level. The employment-population ratio was little changed at 60.1% in August and remains 1.1 percentage points below its February 2020 value.
Compared to July’s 526,000 jobs added and 3.5% unemployment rate, the August report is not as good as July but the labor market remains strong. Average hourly earnings went up 0.3% from July to August vs. 0.5% from June to July. This slowdown in wage growth is precisely what the Fed is looking for to tamper inflation.
According to the report, the number of persons not in the labor force who currently want a job declined by 361,000 to 5.5 million in August. This measure remains above its February 2020 level of 5.0 million. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job. This is a pretty big drop and a welcoming sign of more people wanting to go back to work.
Also according to the report, 6.5 percent of employed persons teleworked because of the coronavirus pandemic, down from 7.1 percent in the prior month. People are going back to the offices. I work in a co-working space and I am definitely seeing a lot more people in the office recently. Companies like Goldman Sachs are said to be done with the pandemic and order all of their employees back to offices 5 days a week after the labor day. As far as I know most employees want the flexibility of remote work but some employers have strong concerns on how remote work affects company culture, employee loyalty and long term productivity. I can see both sides of the argument. It would be really interesting to see how the remote work trend evolves in the next few years. I personally think companies who can manage the cultural aspect of remote work well will be the ultimate winners.