The United States labor market has a strength that defies the efforts of the Federal Reserve (Fed) to contain it and misleads analysts. It was forecast that, in August, job creation would stay at 170,000. But the official data indicates that this figure rose to 187,000, even higher than that of July, maintaining a constant rate of hiring, which opens the expectation for the Fed's response.
Although there has been a slowdown compared to months with many more new jobs, in a finding that the market has weakened, these numbers suggest that there is no imminent recession in sight that could trigger a broad job cut. The stock market reacted from the start with a rise in shares in the hope that this would prevent the Fed from tightening its policy.
The unemployment rate jumped from 3.5% to 3.8%, the highest since February 2022. This is seen as a demonstration that more Americans have gone looking for work in the face of what are considered good offers. Despite this increase, the unemployment rate continues to be at historic lows, at the level of almost half a century ago. Thus, the labor force grew by 0.2% and stood at 62.8%, the highest level since before the impact of the pandemic, in February 2020.
Wages rose 0.2% on average per hour this past month, representing a total increase of 4.3% compared to last year. In both cases it is below forecasts (0.3% and 4.4%, respectively).
This employment data is the last to be known before the Fed meeting scheduled for the middle of this month. The US central bank has applied eleven increases in a year and a half, since March 2022, the most sustained increase in 22 years, to contain inflation. The gain in jobs in July was revised downwards and remains at 157,000 compared to the more than 180,000 that was said. The June revision went from 105,000 to 80,000, the smallest addition since December 2020.
In a recent speech in Jackson Hole (Wyoming), the president of the entity, Jerome Powell, already warned that the fight against rising prices was a battle not yet won and hinted that there will be more increases in interest rates to throughout this year, although he did not specify whether it would be this September or in subsequent meetings of the central bank governors. Inflation has fallen from 9.1% in June 2022 to 3.2% in July 2023 without the occupations and spending having cooled down as expected.
This labor resilience demonstrates, according to the experts, that it has reached a market whose temporary duration matters more than its quality, although it is also improving. Temporary jobs have gone down in favor of longer-term jobs. In another statistic, it is noted that labor demand has moderated and there are 8.8 million vacant positions, a clear decline from a few months ago and, specifically, the 9.2 million in June.
Health care services lead the increase in jobs, with 71,000. Other leading industries were hospitality (bars and restaurants), with 40,000, social assistance (26,000) and construction (22,000). On the contrary, transport and storage lost 34,000 and information, 15,000.
