Labor Market Slows: US Unemployment Rate Rises, Wage Growth Cools

The US unemployment rate rose to 3.8% in August, while wage gains moderated, indicating a slowdown in the labor market and reinforcing expectations that the Federal Reserve will not raise interest rates this month. Nonfarm payrolls increased by 187,000 jobs, down from the monthly average of 271,000 over the past year. The economy needs to create around 100,000 jobs per month to keep up with population growth. Despite the overall slowdown, certain sectors like healthcare and hospitality continue to experience labor shortages. Wage growth slowed, with average hourly earnings rising 0.2% in August. The labor force participation rate increased to 62.8%, the highest level since February 2020.