the labor market “falls back to earth”, unemployment rises to 3.7%.

Hiring slowed sharply in August but remained robust as employers added 315,000 jobs despite softer gains in consumer spending, higher interest rates and the prevailing economy.

The unemployment rate rose from 3.5% to 3.7%, the Labor Ministry announced on Friday. That’s because the labor force — the number of people working and looking for work — grew by nearly 800,000, with many of those on the sidelines flowing into a favorable labor market.

Economists polled by Bloomberg had estimated that 300,000 jobs were added last month.

Job gains for June and July were revised down by a combined 107,000, showing a somewhat less bullish picture of the labor market than previously thought. The change for July was small, still leaving that month with a blockbuster 526,000 additions. However, the revision means the economy recovered all 22 million jobs lost to the pandemic in August rather than July as originally thought.

“The job market we see today cannot continue to defy gravity and is falling back to Earth,” says Daniel Zhao, senior economist at Glassdoor, a leading job site.

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Which sector has the greatest job growth?

Professional and business services led August advances by 68,000. Health care added 48,000 jobs. retail, 44,000; and construction, 22,000.

Leisure and hospitality, which includes restaurants and bars, the sector hardest hit by the pandemic, added a relatively modest 31,000 jobs after averaging 90,000 in the first seven months of the year. The industry, which is struggling to find enough workers, remains 1.2 million jobs below its pre-COVID level.

An encouraging sign: The share of Americans working or looking for work jumped from 62.1% to 62.4%, matching a recent peak in March, but still well below the pre-pandemic level of 63.4%.

A new gender gap: Men regained all the jobs lost during the pandemic. Women don’t have.

That share had risen as workers returned to a hot job market after caring for children or being idled by fears about COVID-19. But it has broadly eased in recent months, suggesting widespread labor shortages could persist and push wage increases higher. That would likely further fuel inflation that is nearing a 40-year high.

In August, average hourly earnings rose 10 cents, keeping the annual increase unchanged at 5.2%.

Slowing job growth and a strong increase in the labor force could help contain inflation and lead the Federal Reserve to raise its key interest rate by half a percentage point this month instead of a third straight three-quarter hike, says Capital economist Michael Pearce. Financially.

Labor Minister Walsh reacts

In an interview, Labor Secretary Marty Walsh noted that the labor force participation rate for prime-age workers (ages 25 to 54) is now just below the pre-pandemic level of 82.8 percent. The rate for women in this age group, at 77.2%, surpassed the pre-COVID mark last month.

“We’re going to put Americans back to work,” Walsh said.

He partly credited the greater availability of workers and child care services as well as the increased willingness of companies to allow employees to work remotely, at least some of the time.

How does the jobs report affect the stock market?

Markets open higher on Friday with the Dow Jones Industrial Average up 130 points, or 0.4%, as of 10 a.m. EST. The S&P 500 also rose 0.4%.

Why is it so hard to hire right now?

Many experts estimated that August would finally signal the start of a pullback in payroll growth now that the U.S. has regained all the jobs lost in the pandemic. So far this year, the labor market has averaged 438,000 monthly payroll gains, fending off a shrinking economy, soaring inflation and growing fears of a recession.

Persistent labor shortages have made many companies reluctant to cut staff and even encouraged some companies to bring in workers they don’t need in the current shaky economy with an eye toward an eventual recovery.

And some industries, such as restaurants and bars, are still well below their pre-Covid employment levels and are struggling to catch up as Americans continue to eat out, travel and do other activities in greater numbers. For now, strong jobs numbers mean more household income and spending, insulating the economy from recession, at least in the short term.

Tom Bemiller, CEO of Aureus Group, which has three auto body shops in suburban Philadelphia, has seen sales rise since the second half of last year as Americans began driving more after cutting back early in the pandemic.

It has hired three technicians so far this year and plans to add five more. But, he says, “It’s very challenging. It’s rare that someone responds to a job ad.”

Tom Bemiller, CEO of Aureus Group

Tom Bemiller, CEO of Aureus Group

The labor shortage “has required us to make changes to the business model,” Bemiller adds.

He has started bringing on some mechanically inclined workers with no bodywork experience as apprentices. Until they are trained, they perform simpler tasks, such as disassembling parts on damaged cars, while more skilled technicians do repairs, he says.

While the labor market remains strong, most workers laid off in spring 2020 have been rehired, leaving less room for outsized employment gains in the coming months. Also, the Federal Reserve’s aggressive rate hikes to fight inflation are expected to eventually curb business hiring and investment.

Moody’s Analytics predicts payroll advances will slow to about 100,000 a month by the end of the year. Some economists predict a recession by mid-2023.

Contributed by Elisabeth Buchwald

Moody’s Analytics predicts payroll advances will slow to about 100,000 a month by the end of the year. Some economists predict a recession by mid-2023.

This article originally appeared on USA TODAY: August jobs report: Labor market ‘falls back to earth’, with 315,000 jobs added

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