Washington (AFP) – US unemployment rose again in August as job creation slowed. A paradoxically positive sign, as fighting inflation means a slowdown in the economy and the labor market is keeping him in excellent health for the time being.
In a tweet, President Joe Biden highlighted the job market “remaining strong” and the fact that “more Americans are returning to work.”
The unemployment rate rose to 3.7% in August for the first time since January, the Labor Department said on Friday. In July, just before the economy was hit hard by the Covid-19 pandemic, it had fallen to its February 2020 level of 3.5%.
The rise in unemployment is also linked to the fact that many workers who had left the labor market due to the pandemic returned to it last month. The participation rate increased by 0.3 points to reach 62.4%. However, this remains one point below pre-pandemic levels.
Among women, in particular, women who had been off work for two and a half years due to childcare, aging, etc. have revived.
“For women aged 25 to 54, two key indicators of access to opportunities surpassed pre-pandemic levels in February 2020 for the first time,” Labor Secretary Marty Walsh said in a press release.
– “strong” –
However, job creation slowed sharply to 315,000 from 526,000 in July (data has been revised downward).
“Despite rising unemployment, the U.S. labor market remains strong,” said Ann-Elisabeth Conker, an economist at job site Indeed.
“With increasing labor force participation and strong employer demand for workers, today’s report highlights that the labor market is not in recession,” she added.
In particular, Oxford Economics economist Nancy Vanden Houten has a lot to say in a note, as “August’s increase marks solid employment growth by historical standards.” .
Neither the economic slowdown, nor the threat of a recession, nor even the measures taken by the US Central Bank (Fed) to curb demand and keep inflation in check, have so far improved the health of the job market.
July even showed unexpected dynamism, discovering for the first time 22 million jobs lost due to Covid-19.
– Fed Against Inflation –
Federal Reserve President Jerome Powell recently stressed that a “return to price stability” would lead to “a prolonged period of low growth” and “a slowdown in the labor market.”
US GDP contracted in the first two quarters of 2022. This corresponds to the classic definition of recession. If the world’s first economy doesn’t seem to fit this box this time around, it’s in particular due to the good shape of its labor market.
The Federal Reserve (Fed) is gradually raising key interest rates to make credit more expensive for individuals and businesses, slowing consumption and reducing pressure on prices. September 20th and he plans to pull it up further at the next meeting on the 21st.
“Fed officials will welcome a slowdown in hiring and an increase in labor supply as a small step towards easing tightness in the job market,” Vanden Houten said.
However, she said, “persistent tensions (…) and still-robust wage growth” could force the Fed to again push for a sharp 3/4 percentage point rate hike, as it did in June and July. I believe there is.
Members of the Fed’s decision-making body, the Financial Services Committee, will also be watching the August inflation rate release on September 13th. Prices in July rose 8.5% year-on-year, moderating after recording the biggest rise in more than 40 years, according to the CPI index.