America’s employers slowed hiring in August in the face of rising interest rates, high inflation and sluggish consumer spending but still added 315,000 jobs, leaving the Federal Reserve on track to increase interest rates again this month.
The unemployment rate increased to 3.7 per cent from a pre-pandemic low of 3.5 per cent in July. Data for July was revised to show that payrolls increased to 526,000 instead of 528,000 as previously reported.
The latest employment report comes a week after Fed chair Jerome Powell warned that households and businesses would feel pain as the US central bank fights soaring prices that result in slow economic growth and probably a rise in unemployment.
“Jobs are up, wages are up, people are back to work and we’re seeing some signs that inflation may be ... beginning to ease,” President Joe Biden said on Friday.
The Fed raised its interest policy rate by 75 basis points in June and July to clamp down on inflation. The Fed next meets on September 20-21 to announce another likely three-quarter-percentage-point increase.
Consumer price data, expected to be released in the middle of the month, will be another significant factor in the Fed's next interest-rate decision.
Recent data shows that the labour market is “clearly out of balance”, as Mr Powell said in his remarks at Jackson Hole last week. Labour Department figures show that there were 11.2 million openings on the last day of July — two open positions for every unemployed person.
The labour force participation rate — the share of the population that is working or looking for work — advanced to 62.4 per cent, and the rate for workers aged 25-54 rose by the most since June 2020 to 82.8 per cent. Teenager participation also surged.
The job gains were led by professional and business services, health care and retail trade.
Agencies contributed to this report