Latest Jobs Report from JP Morgan Chase

The latest report released by the Bureau of Labor Statistics (BLS) showed that the U.S. labor market added 187,000 jobs in August 2023. Despite this steady pace of hiring, the unemployment rate jumped 0.3 percentage points to 3.8%, marking its highest level since February 2022.

The headline number of 187,000 additional jobs in August represents an uptick from the downwardly-revised 105,000 and 157,000 positions added in June and July, respectively. However, August jobs growth still marks a continued cooldown from the average monthly gains of 271,000 jobs reported over the prior 12 months.

While the unemployment rate rose to an 18-month high in August, the 3.8% level remains relatively low by historical standards. The jump in unemployment also came amid an increase in job seekers, as the civilian labor force grew by 736,000 during the month.

“The whisper number, or unofficial forecast, for August payrolls was weaker than the 187K gain we got, so that is encouraging. While some might be concerned about the uptick in the unemployment rate from 3.5% to 3.8%, it looks like it is mostly driven by an increase in the labor force as opposed to a jump in those unemployed,” remarked Shawn Snyder, Executive Director, Global Investment Strategist for J.P. Morgan. The BLS counts only those who are actively looking for work in its unemployment calculation, so the number of workers entering or rejoining the job market contributed to the uptick in the unemployment rate.

Although the persistent level of hiring suggests that the labor market remains resilient, the BLS also reported a more moderate pace of wage growth in August, which could indicate a reprieve in inflationary pressures. Average hourly earnings for all employees rose 0.2% in August, compared with a bump of 0.4% reported in July. This caused the year-over-year (YoY) wage increase to dip to 4.3% from the level of 4.4% recorded in the previous month.

Jobs growth in the construction industry trended higher in August, with gains of 22,000 slightly higher than the average monthly additions of 17,000 over the prior 12 months. Employment in social assistance saw similar results, with August’s increase of 26,000 topping the monthly average of 22,000 jobs added over the previous year. Healthcare posted strong gains, adding 71,000 positions in August. Despite monthly gains of 40,000 in leisure and hospitality, employment in the industry remains 1.7% below the pre-pandemic level of reported in February 2020.

Weakness in the labor market was concentrated in the transportation and warehousing industry, which shed 34,000 jobs in August. These declines stem primarily from the closure of a key trucking business.

Employment outlook

The addition of 187,000 jobs in August speaks to persistent strength in the labor market, even as the pace of hiring continues to cool from the accelerated levels of 271,000 over the prior 12 months.

The uptick in unemployment may not be the most welcome news for those seeking jobs or monitoring the labor market. However, the labor force participation rate – the percentage of people who are either employed or seeking a job – rose 0.2 percentage points in August after remaining flat over the prior two months. At 62.8%, labor force participation has reached its highest level since the sharp declines witnessed at the onset of the pandemic.

In addition to the previously mentioned trucking shutdown, the ongoing strikes by actors and writers in Hollywood may have dampened jobs growth in August.