The U.S. economy added 162,000 jobs in August, a figure significantly higher than the 55,000 economists had predicted, while the unemployment rate remained at 4.1%. July’s job numbers were also revised upwards by 44,000, from a loss of 23,000 to a gain of 21,000, and June’s gain was revised up by 11,000 to 31,000, meaning employment in those two months is 55,000 higher than previously reported. The private sector added 127,000 jobs, exceeding expectations of 53,000, and manufacturing payrolls rose by 16,000, above the estimated 5,000. Construction added 22,000 jobs, bolstered by demand from a data center building surge. Leisure and hospitality unexpectedly added 62,000 jobs after contractions in the prior two months. However, the information sector shed 23,000 jobs, potentially indicating displacement due to artificial intelligence, and the finance sector lost 11,000 jobs.
Average hourly earnings rose 0.3 percent, consistent with the Federal Reserve’s 2 percent inflation goal, and are up 3.1 percent year-over-year, exceeding the expected 3 percent. The average workweek increased to 34.4 hours, a change not forecast by economists, suggesting higher paychecks for workers in August. The federal government’s payrolls contracted by 5,000, continuing a trend, while state government jobs shrank by 10,000. Local public education payrolls expanded by 41,900 and other local government payrolls rose by 8,200.
Economists now suggest the “break-even” rate of job growth needed to prevent rising unemployment may be as low as zero, or between 10,000 and 55,000 jobs, meaning months with negative payroll changes may not necessarily increase unemployment. This shift is attributed to a decline in reliance on immigration-driven workforce growth. The focus now shifts back to inflation, as strong job numbers may complicate efforts to lower it.
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