Gains ‘falling back to earth,’ with 315,000 jobs added

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Hiring numbers declined sharply in August but remained solid as employers added 315,000 jobs, despite weaker consumer spending growth, rising interest rates and a sputtering economy.

The unemployment rate rose from 3.5% to 3.7%, the Labor Ministry said Friday. That’s because the workforce — the number of people working and looking for a job — has increased by nearly 800,000, and many of those on the sidelines are flowing into a favorable labor market.

Economists polled by Bloomberg estimate that 300,000 jobs were created last month.

Job growth for June and July was revised downwards by a total of 107,000, which painted a slightly less thriving picture of the labor market than previously believed. The change for July was small and still left that month with a blockbuster of 526,000 additions. But the revision means the economy has restored all 22 million jobs lost to the pandemic in August rather than in July as originally thought.

“The job market we see today can’t keep defying gravity and is falling back to Earth,” said Daniel Zhao, senior economist at Glassdoor, a leading job board.

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In which field is job growth the greatest?

Professional and business services led the August advance with 68,000. Healthcare provided 48,000 jobs; retail, 44,000; and production, 22,000.

Leisure and hospitality, including restaurants and bars, the sector hardest hit by the pandemic, added a relatively modest 31,000 jobs, after an average of 90,000 in the first seven months of the year. The sector, which struggles to find a sufficient workforce, is still 1.2 million jobs below pre-Covid levels.

An encouraging sign: The proportion of Americans working or looking for a job rose from 62.1% to 62.4%, matching the recent peak in March, but still well below the pre-pandemic level of 63, 4%.

A new gender gap:Men restored all the jobs lost during the pandemic. Women don’t.

That proportion had risen as workers returned to a hot job market after caring for children or being inactive due to fears of COVID-19. But the price has declined globally in recent months, suggesting widespread labor shortages could persist and drive up wage increases. That would likely fuel inflation further close to its 40-year high.

In August, the average hourly wage rose by 10 cents, leaving the annual increase unchanged at a still strong 5.2%.

Slowing job growth and the large surge in the workforce could help moderate inflation and prompt the Federal Reserve to raise its key rate by half a percentage point this month instead of a third consecutive three-quarters increase, says economist Michael Pearce of Capital Economy.

Labor Minister Walsh responds

In an interview, Labor Secretary Marty Walsh noted that the employment rate of first-age workers (25 to 54) is now just below pre-pandemic levels at 82.8%. The percentage for women in that age group, 77.2%, shot past the pre-COVID mark last month.

“We’re getting Americans back to work,” Walsh said.

He attributed in part the greater availability of childcare workers and services, as well as the increased willingness of companies to have employees work remotely at least some of the time.

How does the jobs report affect the stock market?

Markets open higher Friday with the Dow Jones Industrial Average rising 130 points, or 0.4%, as of 10 a.m. EST. The S&P 500 also rose 0.4%.

Why is it so hard to hire someone now?

Many experts believed that August would finally mark the start of a slump in wage growth as the US has recouped all the jobs lost during the pandemic. So far this year, the labor market has averaged 438,000 monthly wage gains, allaying a shrinking economy, rising inflation and mounting fears of a recession.

Persistent labor shortages have led many companies to be hesitant to cut staff and have even encouraged some companies to hire workers they don’t need in the current shaky economy in view of an eventual recovery.

And some industries, such as restaurants and bars, are still well below their pre-COVID employment levels, struggling to catch up as Americans eat out, travel and engage in other activities in greater numbers. For now, robust job numbers mean more household income and spending, isolating the economy from recession, at least in the short term.

Tom Bemiller, CEO of the Aureus Group, which owns three bodyshops in suburban Philadelphia, has seen sales surge since the second half of last year as Americans increased their driving after spending cuts early in the pandemic.

He has hired three technicians so far this year and plans to add five more. But, he says, “It’s quite a challenge. It is rare that someone responds to a vacancy.”

The labor shortage has “forced us to adjust the business model,” added Bemiller.

He started by hiring a number of mechanically inclined workers with no bodywork experience as apprentices. Until they’re trained, they’ll perform simpler tasks like disassembling parts from damaged cars, while more skilled technicians make repairs, he says.

While the labor market remains strong, most of the workers laid off in the spring of 2020 have been rehired, leaving less room for excessive employment gains in the coming months. Also, aggressive Federal Reserve rate hikes to fight inflation are expected to eventually dampen corporate hiring and investment.

Moody’s Analytics predicts that wage advances will slow to about 100,000 per month by the end of the year. Some economists predict a recession by mid-2023.

Moody’s Analytics predicts that wage advances will slow to about 100,000 per month by the end of the year. Some economists predict a recession by mid-2023.

Key points from the jobs report

► Employers added 315,000 jobs, a big slowdown from July’s 526,000, but still a solid number.

► The unemployment rate rose from 3.5% to 3.7%, but that’s because 786,000 more people have entered the workforce, including those who are working or looking for a job.

► The proportion of all adults working or looking for a job increased from 62.1% to 62.4%, helping to reduce labor shortages and wage growth.

► The report could foreshadow a moderating labor market and declining inflation. That could lead to the Fed raising its key interest rate by half a percentage point this month, instead of three-quarters.

Contributions: Elisabeth Buchwald

The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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