August Jobs Report: Jobs Bounce Back
August Jobs Report: Jobs Bounce Back
The August Employment Report bounced back in August, with 162K jobs added. June and July were revised up to paint a bit of a rosier picture for the summer. The August jobs numbers show a labor market catching its breath rather than losing steam. 162,000 new jobs, broader industry participation, and workers feeling confident enough to voluntarily leave positions all point to underlying resilience.
Unemployment remained stable at 4.1%, despite an increase in job leavers as some workers were feeling more optimistic with the slight boost in activity. Meanwhile, people on the margins may have begun entering back into the labor supply pool as labor force participation ticked up to 61.6% and the population of marginally attached and discouraged workers fell.
Job gains
Job gains were more evenly distributed in August. Health Care no longer dominates the market (+13K, vs 12 mo average of 32K), and a rebound for Leisure and Hospitality (+62K) and Local Government Education (+42K) give more opportunities for workers across industries to find employment. Professional and Business Services (+10K) continued to see job growth, with AI acting as a potential stimulant for this sector.
Job losses
Information and Financial Activities continued to shed jobs in August, down -23K and -11K respectively. These industries have seen softening demand for months, partially still stemming from the overhiring that hit during the post-pandemic boom, and possibly as a result of AI’s rising influence across industries.
Labor force dynamics
Labor force participation increased after 8 months of declines. The unemployment rate was unchanged at 4.1%, as employment opportunities rose and offered some relief to those looking for work. However, the long-term unemployment level increased by 159K, signalling that employers were likely skimming from the top of the unemployment pool to fill jobs in August, and those who have been in a steady-state of unemployment still see little relief.
Job opportunities increasing in August did provide more stability for those looking for full-time work, as the population who is working part-time for economic reasons shrank by -414K in August. Likewise, the populations of marginally attached and discouraged workers both dropped (-102K and -35K, respectively), possibly as more of these side-lined workers found their way back into the workforce, either through employment, or as reentrants to the unemployment pool.
Wages and hours
Wage growth is still slowing, now at 3.1% year-over-year. Inflation is proving to be quite sticky, so it is likely that next week’s inflation read will show higher than wage growth for another month, increasing financial insecurity for workers.
Work week hours edged up to 34.4, but with just a single month’s increase, this is too early to say whether this is a signal of increased demand for labor. However, part-time employment for economic reasons fell, making it possible that more full-time opportunities are showing up, giving workers the chance to increase their earnings.
The labor market is in a fragile state. Both employers and workers are showing increased sensitivity to inflation, interest rates, and geopolitical tensions. While the August report and prior months’ revisions are encouraging signs, we are not yet seeing stable momentum. Fluctuations in prices and confusion over policy initiatives will continue to impact job growth and turnover. But for now, the summer is ending on a high note as we transition to the fall.
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