Unemployment rate down, job creation up, but less than expected: the labor market in the United States continues its slow erosion, two months before the presidential election and while the Fed is preparing to lower rates to avoid a surge in unemployment.
The unemployment rate fell slightly as expected, to 4.2% from 4.3% in July, according to figures released Friday by the Labor Department.
In addition, 142,000 jobs were created in the private and public sectors, particularly in the construction and health sectors, more than the 114,000 in July, but less than expected.
In addition, job creations for the previous two months were revised, showing 86,000 fewer jobs than reported that were created, after a significant downward revision, already, to job creations for 2023 and early 2024.
President Joe Biden, however, praised the good health of the job market: “thanks to our work to save the economy, nearly 16 million new jobs have been created” since he arrived at the White House in January 2021.
Because the subject will weigh heavily in the choice of voters, called to vote on November 5 between the Democratic Vice President Kamala Harris and the former Republican President Donald Trump.
“The employment numbers are terrible,” he told reporters in New York on Friday. Earlier, he had criticized his rival in a statement: “The warning signs are flashing as Kamala’s economy continues to weaken.”
“Risk to employment”
“An undeniable and widespread decline in hiring is now underway,” Ian Shepherdson, president and chief economist at Pantheon Macroeconomics, said in a note.
Concerns are growing about the employment situation in the coming months, after two years of particularly strong job growth, with an unemployment rate at its lowest.
To avoid seeing the situation deteriorate too much, the American Central Bank (Fed) has signalled its intention to begin lowering its rates at its next meeting on 17 and 18 September.
The institution had raised them to combat inflation by slowing down economic activity.
“There has been continued moderation in the labor market,” said Christopher Waller, one of the Fed’s governors.
However, “I do not believe that the economy is in recession or that it is necessarily heading towards a recession in the future,” he said, saying however that he perceives “a risk for employment that I will monitor closely.”
“Previously overheated”
Another Fed official, New York Fed President John Williams, noted earlier Friday that at this point the unemployment rate has risen, but “remains relatively low by historical standards.”
“Part of this increase reflects a slowdown in the previously overheated labor market,” but also an increase in the number of workers, rather than a high number of layoffs, he added.
There are many signs that the golden age of employees being able to easily change jobs and increase their pay is over.
The number of vacancies thus fell at the end of July to its lowest level since January 2021, before the country experienced a significant labor shortage, the JOLTS survey published by the Labor Department showed on Wednesday.
A Fed survey conducted over the summer showed that some parts of the United States are seeing a slowdown in the labor market, with employers being more selective and, as a result, candidates taking longer to find jobs.
One Minnesota employer, for example, reported that “many companies are becoming much more picky” about who they hire.