Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.
Payrolls rose by 315,000 in August—just shy of the 318,000 expected—but still a pretty good number. The unemployment rate ticked up to 3.7%, as the labor force rose by 786,000. Remember that as more people enter the labor force, the unemployment rate can go up, even as the economy is adding jobs.
Here are some other highlights:
Just over 3.5 million jobs were added in the first eight months of 2022. Since 1994, 2021 was the only year to add more than 3.5 million jobs, and we still have four more months to go in 2022.
Employment is now 240,000 higher than before the pandemic.
The biggest job gains were in professional and business services (+68,000), healthcare (+48,000), and retail trade (+44,000).
Job growth for June and July was revised lower by a total of 107,000.
Wages are 5.2% higher than a year ago.
Considering the economy contracted in the first half of the year, this is a very solid report. In fact, some are saying it’s just what the stock market was looking for: strong job growth, but not too strong. This means the Fed won’t need to be more aggressive with rate hikes, even though inflation is still running very high.
We received two other bits of good news on the labor market this week. First came the JOLTS report, which looks at job openings and labor turnover. It found that the number of available jobs rose to 11.2 million at the end of July, a good sign that businesses will keep hiring in the months to come.
Last week, we found out that weekly jobless claims fell to their lowest level in two months. This was a nice surprise, as the slowdown in the economy had many economists looking for an increase in layoffs.
What better way to start off the month than with a bunch of great data on the labor market? The stock market seems to agree, as all three major indexes rose this morning after the August jobs report came out. There’s still a lot to be concerned about, like a possible recession, 40-year-high inflation, and the slowdown in the housing market. But, we will save those issues for another column.