Unemployment Rate Rises to 3.8 Percent

September 5, 2023 – Employment rose by 187,000 in August as the U.S. unemployment rate rose to 3.8 percent, according to the most recent U.S. Bureau of Labor Statistics report. The number of unemployed persons was 6.4 million in August. Employment continued to trend up in healthcare, leisure and hospitality, social assistance, and construction. Employment in transportation and warehousing declined.

Among the major worker groups, the unemployment rates for adult men (3.7 percent), whites (3.4 percent), and Asians (3.1 percent) rose in August. The jobless rates for adult women (3.2 percent), teenagers (12.2 percent), blacks (5.3 percent), and Hispanics (4.9 percent) showed little change over the month.

Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 294,000 to 2.9 million in August, offsetting a decrease of 280,000 in July. In August, the number of new entrants edged up to 597,000. (New entrants are unemployed persons with no previous work experience.) Both the number of persons unemployed less than five weeks, at 2.2 million, and the number of long-term unemployed (those jobless for 27 weeks or more), at 1.3 million, edged up in August. The long-term unemployed accounted for 20.3 percent of all unemployed persons.

The number of persons employed part time for economic reasons, at 4.2 million, changed little in August. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. In August, the number of persons not in the labor force who currently want a job was 5.4 million, little changed from the prior month. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.

“The U.S. labor market continues to come back to earth but from a very high peak,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “The labor market was sprinting last year and now it’s getting closer to a marathon pace. A slowdown is welcome; it’s the only way to go the distance.”

“This is still not the picture of the labor market we would expect to see if the economy were in danger of decelerating dramatically in the short term, although without question there are signs of moderation,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.

“The broad message here seems to be that we are nearing full employment, with supply and demand coming more into balance,” Bank of America U.S. economist Stephen Juneau said in a client note. “The gains are concentrated in the laggard sectors. The rest of the labor market probably is at full employment.”

Related: CEOs Anticipate a Possible Recession

“This report is more or less right in line with Fed expectations,” said Dan Greenhaus, chief economist and strategist at Solus Alternative Asset Management. “The labor market continues to slow and loosen, even accounting for the strike activity, and I don’t think much about this report changes the Fed narrative.”

Where Job Growth Occurred

• In August, healthcare added 71,000 jobs, following a gain of similar magnitude in the prior month. Over the month, job growth continued in ambulatory healthcare services (+40,000), nursing and residential care facilities (+17,000), and hospitals (+15,000).

Global Hiring Expectations Down for Q3
While temperatures in many countries are heating up, global hiring plans are cooling off heading into summer, according to the latest ManpowerGroup Employment Outlook Survey of nearly 39,000 employers in 41 countries. The net employment outlook is negative four percent lower than this time last year suggesting that economic headwinds are starting to impact employers’ hiring expectations.

“This data suggests employers are planning more measured hiring for the quarter ahead as they navigate a range of local and macro level challenges from supply constraints to uneven consumer confidence and rising inflation,” said Jonas Prising, chairman and CEO. “That said, attracting and retaining business critical talent remains a priority, and our survey respondents around the world continue to be focused on hiring for in-demand roles.”

• Employment in leisure and hospitality continued to trend up in August (+40,000). The industry had gained an average of 61,000 jobs per month over the prior 12 months. Employment in the industry remains below its pre-pandemic February 2020 level by 290,000, or 1.7 percent.

• Employment in social assistance increased by 26,000 in August, in line with the prior 12-month average gain (+22,000). Over the month, job growth continued in individual and family services (+21,000).

• Construction employment continued to trend up in August (+22,000), in line with the average monthly gain over the prior 12 months (+17,000). Within the industry, employment continued to trend up over the month in specialty trade contractors (+11,000) and in heavy and civil engineering construction (+7,000).

• Transportation and warehousing lost 34,000 jobs in August. Employment in truck transportation fell sharply (-37,000), largely reflecting a business closure. Couriers and messengers lost 9,000 jobs, while air transportation added 3,000 jobs. Employment in transportation and warehousing had shown little net change over the prior 12 months.

• Employment in professional and business services changed little in August (+19,000) and has shown essentially no net change since May. Professional, scientific, and technical services employment continued to trend up over the month (+21,000). In contrast, employment in temporary help services continued to trend down (-19,000) and has declined by 242,000 since its peak in March 2022.

• Information employment changed little in August (-15,000). Within the industry, employment in motion picture and sound recording industries decreased by 17,000, reflecting strike activity. Job losses continued in telecommunications (-4,000).

• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; financial activities; other services; and government.

Related: The Prospect of a Recession Remains Murky

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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