August Jobs Report Signals Slowing but Stable US Labor Market
The latest employment data reveals that the U.S. labor market is gradually cooling from the high growth rates seen in 2021 and 2022, yet it remains stable overall. The preliminary estimate of the benchmark revision for August confirms this trend, with construction emerging as a leading sector for job growth, adding 34,000 positions to payrolls.
Wage Growth Trends in August
Despite the deceleration in overall job gains, wage growth picked up speed in August. Wages grew at a year-over-year rate of 3.8%, reflecting a 0.7 percentage point drop from the previous year. Notably, wage growth has surpassed the inflation rate, which aligns with typical outcomes when productivity gains drive the economy.
National Employment Overview
The Employment Situation Summary for August shows total nonfarm payrolls increasing by 142,000 jobs, following a revised gain of 89,000 in July. However, the revisions for the previous two months were significant. June’s employment growth was revised down by 61,000 jobs, bringing the total to 118,000, while July’s figure was adjusted lower by 25,000, totaling 89,000. Combined, these revisions indicate 86,000 fewer jobs than initially reported.
Since the Federal Reserve began its interest rate hikes in March 2022, a total of 7.9 million jobs have been created. This growth includes 1,475,000 new jobs in the first eight months of 2024, with average monthly gains of 184,000 compared to last year’s average of 251,000. Despite restrictive monetary policy, the job market has remained resilient, contributing to sustained employment growth.
Unemployment Rate and Labor Force Participation
The unemployment rate decreased slightly in August, moving from 4.3% in July to 4.2%. The decline reflects a decrease of 48,000 unemployed persons coupled with an increase of 168,000 employed individuals. Meanwhile, the labor force participation rate held steady at 62.7%. Among prime working-age adults (ages 25 to 54), the participation rate dipped slightly to 83.9%, still above its pre-pandemic level of 83.1%. However, the overall participation rate remains below its pre-pandemic mark of 63.3% at the start of 2020.
Sector-Specific Employment Changes
In August, construction, healthcare, and social assistance sectors all posted job gains, while the manufacturing sector experienced job losses:
- Construction: +34,000 jobs
- Healthcare: +31,000 jobs
- Social Assistance: +13,000 jobs
- Manufacturing: -24,000 jobs
Other major industries, such as retail, financial activities, and professional services, showed minimal change during the month.
Construction Sector Highlights
Construction led August’s job growth, adding 34,000 jobs compared to the 13,000 positions gained in July. The growth was driven primarily by non-residential construction, which added 28,300 jobs, while residential construction contributed 5,600 positions. Residential construction employment now totals 3.4 million, consisting of 951,000 builders and 2.4 million residential specialty trade contractors. The six-month average gain for residential construction stands at approximately 5,667 jobs per month, while the sector has added 63,100 jobs over the past year. Since its low point after the Great Recession, the residential construction sector has regained 1,385,000 positions.
The unemployment rate for construction workers decreased to 3.9% in August, indicating continued stability within the sector. This rate has remained relatively low following a peak of 15.3% in April 2020 during the COVID-19 pandemic’s impact on housing demand.
The August jobs report underscores a labor market that, while cooling, remains robust and adaptable. The steady job gains, coupled with increasing wages and low unemployment, suggest that the U.S. economy is finding balance despite ongoing economic challenges. As sectors like construction continue to expand, it will be crucial to monitor how policy changes, economic shifts, and workforce trends influence overall employment growth in the coming months.
