August Jobs Report: 187,000 Jobs Added, Unemployment Up to 3.8%

(Image courtesy of U.S. Bureau of Labor Statistics)

The U.S. Bureau of Labor Statistics reported that in August, 187,000 jobs were added. However, the unemployment rate also rose slightly, by 0.3 percentage point, to 3.8%.

Additionally, the report noted downward revisions for its June and July numbers, by 80,000 (from 185,000 to 105,000) and 30,000 (from 187,000 to 157,000), respectively.

“Payroll employment increased in August, but with the markdowns in the rate of job growth for June and July noted in this report, the cumulative effect is a noticeable slowdown in the job market,” Mortgage Bankers Association Chief Economist Mike Fratantoni said. “Job gains are now averaging only 150,000 over the past three months. As in prior months, job growth is increasingly concentrated in just a few sectors like hospitality and health care, indicating that the pace of growth could slow much faster if these sectors were to cool down.”

Fratantoni noted that the rise in the unemployment rate was caused by an increase in the labor force participation rate, as more people are actively looking for work amid some demand slowdowns. However, there are still more job openings than unemployed individuals.

Employment continued to trend up in health care, leisure and hospitality, social assistance, and construction. Numbers were down in the transportation and warehousing industries.

Industries that remained fairly flat included mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; retail trade; financial activities; other services; and government.

As for what might be next with the Federal Reserve?

“This report should be enough for the Fed to keep the federal funds target rate on hold at its next meeting,” Fratantoni said. “We expect that they will hold here until next spring, and their next move should be cut. The combination of a still strong job market, and rates that should trend down over time, is positive for the housing market.”