Labor market continued to cool in August with 187,000 jobs added

 It seems like the Federal Reserve may get the “soft landing” they’ve been promising with their interest rate hikes. Stocks rose prior to the release of the August Jobs Report as the continued cooldown of the US economy indicates a possibility of a halt in future hikes. Although the number of jobs added came in under expectations for August, this cooldown will temper inflation rates, balancing out the economy.

The unemployment rate unexpectedly rose

Economic expectations of the unemployment rate also were proven to be off base as the rate increased to 3.8% in August — the highest since February 2022. However, the rate stands at just 0.1% higher than recorded in August 2022, indicating that an end-of-summer cooldown may become the norm.

Among the major working groups, unemployment increased for white workers (3.4%), adult males (3.7%), and Asians (3.3%). The unemployment rates for adult women, Hispanics, teenagers, and Black workers saw little change in August.

The healthcare industry continues to grow

Despite a cooldown, employment in healthcare and social services trended up in August with 97,300 jobs added. This number is similar to the gains witnessed throughout the summer as employment in ambulatory services (+40,000), nursing and residential care facilities (+17,000), and hospitals (+15,000) saw the most growth in the industry.

Employment in leisure and hospitality also grew significantly in August with 40,000 new positions added. However, this stands at 21,000 jobs below average growth recorded over the last 12 months. Construction rounds out the top three industries with the highest number of jobs added with 26,000 new positions.

Transportation and warehousing, on the other hand, lost 34,000 jobs in August possibly due to a large business closure.

Investors remain optimistic

This economic cooldown comes as a sigh of relief to many as the Federal Reserve has long commented on the devastating effects of a too-hot labor market, mostly in terms of high inflation. With fewer jobs being added and economic growth being revised down for Q2, economic experts expect interest rate hikes to come to a halt this September.

Futures for the DOW Jones Industrial Average rose 0.4% while the S&P rose 0.2% ahead of the release of August’s jobs report, with many optimistic that this cooldown will convince the Fed to hold interest rates steady moving forward. Watch this space to see how the Federal Reserve response impacts  September’s Job Report.

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