Unemployment Rate in the US Rises to 3.8% in August, Adding Pressure on Labor Market
The Bureau of Labor Statistics (BLS) released data on Friday, revealing that the unemployment rate in the United States has risen three tenths to 3.8% in August. The figures come amid concerns over a slowdown in job creation, which is believed to be a result of increasing interest rates.
According to the BLS, the net creation of new jobs in August remained relatively stable at 187,000 positions. However, this falls below the average for the past 12 months, which stands at 271,000. The data indicates a cooling in the labor market, with the number of unemployed people increasing by 514,000 to 6.4 million.
The healthcare sector contributed the most to job creation in August, adding 71,000 new positions, followed by leisure and hospitality with 40,000 new jobs, social assistance with 26,000, and construction with 22,000.
The US Federal Reserve (Fed) has been actively raising interest rates, with 11 hikes in the last 18 months, in an effort to control inflation. The decision to increase rates further in July brings them to the highest level since 2001, standing between 5.25% and 5.5%.
Fed President, Jerome Powell, stated at a recent forum in Jackson Hole that high rates would be maintained until inflation is under control. However, he also hinted at the possibility of a pause in rate hikes, depending on the assessment of economic data and risks.
Economists speculate that the rise in the unemployment rate and the slowdown in job creation could lead to the Fed opting for a pause in rate hikes. These concerns have also resulted in a sharp rise in Wall Street futures, with the S&P growing over 0.65%, the Dow Jones up by 0.50%, and the Nasdaq rising by 0.66%.
The next meeting of the Fed, scheduled for September 19 and 20, will heavily consider inflation data and unemployment figures when deciding on the future of interest rates.
Sources:
– Reuters: A sign advertising job offers is seen outside a Starbucks in Manhattan, New York (REUTERS/Andrew Kelly/File)
– EFE