In August, the US economy created 315,000 new employments

• The economy added 315,000 jobs in August, just below estimates.
• The unemployment rate ticked up to 3.7% as more workers rejoined the labor force.
• Average hourly earnings rose 0.3% for the month and 5.2% from a year ago.

According to data released on Friday by the Bureau of Labor Statistics, nonfarm payrolls increased significantly in August despite a generally sluggish economy, while the unemployment rate increased slightly as more people entered the labour force.

For the month, the economy added 315,000 jobs, barely shy of the Dow Jones forecast of 318,000. In line with projections, the unemployment rate increased by two-tenths of a percentage point to 3.7%.

Even still, wage growth was a little slower than anticipated. In line with expectations, average hourly wages grew 0.3% for the month and 5.2% from a year earlier.

The figures nonetheless present a challenge for the Federal Reserve as it attempts to rein back inflation.

These increases in employment and wages occurred in the midst of skyrocketing inflation and worries about a faltering economy that recorded negative GDP numbers in the first two quarters of the year, which is normally regarded as a warning sign of recession.

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As a result of a supply-demand imbalance, significant assistance from the Fed and Congress, the war in Ukraine, and other factors, inflation is approaching its fastest rate in more than 40 years.

A series of interest rate increases by the Fed totaling 2.25% have been used to combat the inflation issue, and they are anticipated to continue into next year. Leading central bankers have recently issued warnings that they have no intention of easing policy tightening measures and anticipate that even after they stop raising rates, they will remain high “for some time.”

The jobs market is a crucial route through which the Fed searches for policy impacts. In addition to active hiring, there are more job opportunities than there are employees to fill them, by a ratio of over 2-to-1. This puts pressure on salaries and sets off a feedback cycle that raises prices for petrol, groceries, rent, and a variety of other costs.

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