United States: Job gains exceed expectations in August, but unemployment rate ticks up
September 2, 2022
Total non-farm payrolls increased by 315,000 in August, down from July’s bumper 526,000 figure but above market expectations. As a result, employment is now above its pre-pandemic level. Professional and business services, healthcare and retail saw the most new jobs added, while the hospitality sector saw smaller job gains compared to the first seven months of the year, in a sign that the sector is normalizing following a post-Covid-19 rebound.
Meanwhile, the unemployment rate rose to 3.7% in August from 3.5% in July as more people entered the labor market, while annual wage growth was unchanged at 5.2% year on year.
All in all, the data shows the labor market remained robust midway through Q3. Looking ahead, the Consensus is for the labor market to lose steam heading into 2023 as the economy slackens amid higher interest rates, with the unemployment rate forecast to move back above 4% next year.
TD Economics’ Thomas Feltmate said:
“Payrolls surpassing expectations is something we've become accustomed to seeing. Since the start of the year, non-farm employment has meaningfully beat the consensus forecast in seven of the last eight months. The reversal in the unemployment rate should not be viewed negatively as it was largely driven by an increase in labor supply. We have long said that the participation rate has been underperforming, and without more workers entering the labor force, employment gains would soon start to fade.”
Author: Oliver Reynolds, Economist