187,000 Jobs Added In August 2023

  • Post category:Business
  • Reading time:3 mins read
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Despite the high interest rates the Federal Reserve has imposed, employers added a respectable 187,000 jobs in August, showing that the labor market is still robust.

The increase in employment surpassed July’s revised gain of 157,000 jobs, but it still indicated a slower hiring rate than earlier in the year. The unemployment rate increased from 3.5% to 3.8%, reaching its highest point since February 2022 but remaining historically low.

Even though monthly nonfarm payrolls increased a little bit more than anticipated, the unemployment rate unexpectedly increased to a 1-1/2 year high in August, and hourly wages decreased.

The economy may slow down and the Fed may feel more confident that inflation will continue to fall if the job market slows. Inflation has decreased from a peak of 9.1% last year to 3.2% as a result of the Fed’s streak of 11 interest rate increases. Numerous economists believe the Fed may decide that no additional rate increases are required given signs that inflation has continued to decline.

The Fed wants to see slower hiring because high labor demand often leads to rising wages and inflation. The goal of the central bank is to achieve a rare “soft landing,” in which rate increases are able to moderate high inflation without triggering a severe recession by slowing hiring, borrowing, and spending. Because a high demand for workers tends to drive up wages and fuel inflation, the Fed wants to see a slowdown in hiring.

According to economists and financial market analysts, the Fed may have reached the end of its interest rate hike cycle. Nearly 90% of the analysts polled by the CME Group anticipate that the Fed will maintain current interest rates at its next meeting in September.

There is growing hope for a soft landing. The economy has resisted the pressure of rising borrowing costs despite expanding more slowly than it did in the boom that followed the pandemic recession of 2020. From April to June, the GDP increased at a respectable annual rate of 2.1 percent. Businesses increased their investments while consumers kept on spending.

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