Jobs report offers hope Fed can engineer a soft landing

WASHINGTON — The nation’s job market last month delivered what the Federal Reserve and nervous investors had been hoping for: a Goldilocks-style hiring report.

Job growth was solid — not too hot, not too cold. And more Americans began looking for work, which could ease worker shortages over time and defuse some of the inflationary pressures that the Fed has made its

No. 1 mission.

Employers added 315,000 jobs, roughly what economists had expected, down from an average 487,000 a month over the past year. The unemployment rate reached 3.7 percent, its highest level since February.

Here are takeaways from the August jobs report:

Making fed’s task easier

Friday’s report from the government suggests that the Fed may find it a little easier to bring the economy in for a soft landing. Key to that task is seeing hiring ease a bit — enough, anyway, to reduce the pressure on employers to raise pay. When they hand out raises, businesses typically increase prices for their customers to offset their higher labor costs, thereby feeding inflation.

Not only did August’s job creation decelerate from July’s breakneck pace — 526,000 added jobs — but the Labor Department also revised down its earlier estimate of the gains for

June and July by a combined 107,000. Also, average hourly pay rose 0.3 percent last month from July, the lowest month-to-month gain since April.

“If the Fed were to design the (jobs) report, this is the kind of report they would have designed,” said Megan Greene, chief economist at the Kroll Institute.

Wait, how is higher unemployment good news?

The unemployment rate rose last month to 3.7 percent from 3.5 percent, which had tied a 50-year low. But the increase in August was welcome: The number of Americans either working or looking for work surged by 786,000 in August, the biggest one-month jump since January. And their share of the population — the labor force participation rate — rose to 62.4 percent last month, its highest level since March.

Last month, the number of Americans who told the Labor Department they had jobs rose by 442,000. And the number who said they were unemployed also rose, by 344,000. That suggests that many people who started looking for a job didn’t find one right away.

The more Americans there are who are looking for work, the less pressure there is on employers to raise wages to attract applicants, increase prices and contribute to inflation.

Broad job gains

Last month’s jobs gains were spread broadly across industries. Retailers added 44,000. Health care gained 48,000, including nearly 15,000 at hospitals.

Factories added 22,000 jobs despite a slowing global economy.

But hiring in leisure and hospitality slowed sharply in August — to 31,000, including just 18,000 at bars and restaurants. Both gains were the weakest since December 2020.

Fewer hours

The average workweek slipped slightly last month to 34.5 hours. Those figures haven’t changed much this year even as employers have complained about a worker shortage.

So why aren’t they assigning more hours to the workers they have on hand?

Labor Secretary Walsh suspects that employees, especially in high-paying occupations, are more conscious of striking a balance between their work and their personal lives and balk at putting in ever more hours on the job.

In the leisure and hospitality business, which includes restaurants and hotels, average hours worked peaked in April 2021 and has fallen more or less steadily since then.