The August jobs report for the United States that was released on Friday morning showed that the country's labor market is slowing down as there was an increase in hiring of 170,000 last month while the unemployment rate was found steady at 3.5%.
The numbers represent a drop from the 187,000 job gains that were seen in July and the 312,000 monthly average that officials recorded in the last year. However, the latest statistics show a number slightly above the average pre-pandemic monthly increase.
US Job Growth Slows Down
In a statement, EY chief economist Gregory Daco said that the August jobs report will most likely provide more evidence that the nation's labor market is gradually cooling down. He anticipates that there will be some "noisy data" on Friday because of the ongoing actors and writers strike.
The incident has resulted in the shutdown of most of Hollywood's film and television productions. He also cited the bankruptcy of trucking giant Yellow as being a factor in the noisy data, as per Fox Business.
Daco noted that they estimated that these two factors could potentially pose a cumulative drag on payrolls that would total roughly 30,000 to 40,000 jobs in August. Now, the Federal Reserve is closely monitoring the report to look for any evidence that the country's labor market is finally softening after several months of solid job gains.
The situation comes as policymakers have struggled to wrestle with inflation and get it under control. While the consumer price index has already cooled from a peak of 9.1% in June 2022, it is still well above the Fed's preferred 2% target and comes even after 11 straight interest rate increases.
The U.S. Central Bank welcomes the slower job growth and further moderation in wage gains that were revealed on Friday. Over the past year, the labor market has remained historically tight in defiance of economists' expectations for a slowdown. But there is hope as there are signs that it is starting to soften up.
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Economy Cooling Down
The recent report also showed that pay growth slowed down for workers who changed jobs and those who remained in their current positions. The chief economist at ADP, Nela Richardson, said that the latest numbers are consistent with the pace of job creation before the health crisis, according to CNBC.
In the press release, Richardson added that the country is now moving toward more sustainable growth in pay and employment after two years of exceptional gains related to the recovery of the economy. The situation comes as investors and economists are divided on whether or not inflation in the U.S. can continue to trend downward toward 2% without causing a significant slowdown in the economy.
Economic research director for North America at the Indeed Hiring Lab, Nick Bunker, said that the "Great Resignation" is finally over. He said that the rates at which workers were voluntarily leaving their jobs are now on par with numbers seen before the COVID-19 pandemic.
In July, the number of open jobs in the United States fell to a two-year low based on data released by the Job Opening and Labor Turnover Survey (JOLTS). It also showed that there were roughly 8.8 million jobs that were open at the end of that month, which was down from the 9.16 million job openings seen in the prior month, said Yahoo Finance.
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