U.S. jobs market is likely to be another bright spot in the economy this month
RACHEL MARTIN, HOST:
As we head into the Labor Day weekend, a new report out this morning shows that the U.S. labor market is still going strong. Employers added another 315,000 jobs last month. So far this year, the economy has added more than 3 1/2 million jobs. NPR's Scott Horsley joins us now with details of the report. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: So you know this. The job market has been a real bright spot in the economy. How did it look in August? Put it in perspective.
HORSLEY: Yeah, it's still shining pretty bright. The U.S. has now replaced all the jobs that were lost during the pandemic. We saw solid gains this past month in retail, in manufacturing, in business services, in health care. The leisure and hospitality sector did see a little bit of a slowdown in hiring - only 31,000 jobs added in that industry last month. And there was also a bit of a slowdown in construction, with just 16,000 jobs added. But overall, this was another really good month for hiring. And what's particularly encouraging is we saw a big influx of new workers in August. Nearly 800,000 people started working or looking for work during the month. And the share of the adult population that's in the workforce also rose, so that's a good sign to see.
MARTIN: So it's a good situation for workers. And yet we've been seeing big swings in the stock market in recent days, mostly in the downward direction. How does that jibe?
HORSLEY: Yeah, investors are worried that there is a cloud behind this silver-line job market, and that is higher inflation and higher interest rates. Federal Reserve Chairman Jerome Powell warned a week ago in Jackson Hole, Wyo., that the central bank is going to raise interest rates and keep them up in order to get control over these very high prices we've seen. Powell acknowledged that's likely to cause some pain for both businesses and families. And one of the things he's been worried about is that even as the U.S. is adding a lot of jobs, the labor market has looked really lopsided.
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JEROME POWELL: The labor market is particularly strong, but it is clearly out of balance, with demand for workers substantially exceeding the supply of available workers.
HORSLEY: The concern there is that a very tight job market could fuel additional demand, and that could push inflation even higher. However, Powell and his colleagues will be encouraged by that influx of new workers that shows up in today's report. The unemployment rate actually inched up last month to 3.7%, up from 3.5% in July. But unemployment rose for what we say is the right reason - that is, more people coming off the sidelines, joining the workforce. This is still a tight job market, but it's not quite as tight as it had been, and that could take a little bit of pressure off inflation.
MARTIN: What happens to wages in such a tight market?
HORSLEY: Wages are going up, but not as fast as prices, so workers are getting more money in their paychecks, but it's not stretching as far at the supermarket or when they have to pay the electric bill, for example. Average wages in August were up 5.2% from a year ago. That's the same annual increase as we saw the month before. Nela Richardson, who's chief economist at the payroll processing company ADP, says it looks as though pay raises are starting to level off.
NELA RICHARDSON: We have seen this big jump now stabilize. Wages have jumped up, but they have stabilized. And so, depending on your view - half empty or half full - could be interpreted as good news for the future of inflation.
HORSLEY: The Federal Reserve is likely to be encouraged by that, and investors seem to like what they're seeing as well.
MARTIN: NPR's Scott Horsley, thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.