Job Growth and Openings Slow to Pre-Covid Rates

Employers added 187,000 payroll jobs in August, concentrated in just four industries, and the unemployment rate ticked up to 3.8% from 3.5% in July, primarily from an unexpectedly large jump in the labor force.

Payroll job gains over the past three months have returned to pre-Covid rates.

The African American unemployment rate dropped to 5.3%, but increased for all other races and ethnicities.

Job opening rate remains relatively high, but has slowed dramatically over the past two years. They are above average in transportation, warehousing and utilities; information; health care and social assistance; and leisure and hospitality industries. 

• The labor force participation rate remains below pre-Covid levels despite the large increase in the labor force in August (+736,000). 
  
  
• The overall quit rate has slowed to pre-Covid levels, but remains elevated in retail trade, leisure and hospitality, and nondurable goods manufacturing.

 Annual wage growth remains in the 4.3% to 4.4% range it has been in since March 2023, but down from the 5.4% wage gain in August 2022.

Four industries accounted for 83% of the monthly job gain. Health Care (+70,900), Leisure and Hospitality (+40,000), Social Assistance (+22,400), and Construction (+22,000). There was very little job growth in all other major industry groups.

Outlook: Future job gains are expected to continue in health care and for those industries that have still not fully recovered their pre-Covid highs, but will likely remain muted for most other industries. Downward revisions to the job gains for the past few months also suggest a slowing job market going forward. The only question is whether job gains will slow further, or remain at pre-Covid rates.