Updated on Sept. 6 with data from the latest jobs report from the Bureau of Labor Statistics.
Job growth was much weaker than previously reported
In the latest jobs report released Sept. 6 by the Bureau of Labor Statistics, job growth for June and July were revised down by a combined 86,000 jobs. Total nonfarm payroll employment grew by 118,000 jobs in June (down from 179,000) and by 89,000 in July (down from 114,000).
Revisions are common. They’re based on new reports BLS receives from businesses and government agencies. However, this one closely follows another that was the largest in 15 years. On Aug. 21, a new payroll data revision showed that in the 12 months that ended in March, job growth was much lower than originally reported, according to the BLS.
Previously, the March 2024 jobs report showed that the number of jobs grew at an average pace of 242,000 during the preceding 12 months. The corrected data shows that monthly growth during this time period was actually 174,000 — a difference of 818,000 over 12 months.
The job sectors with the largest downward revisions in growth included information (-2.3%); mining and logging (-1.7%); as well as professional and business services (-1.6%).
The Federal Reserve takes job growth and other employment data into account as it makes its decisions on the federal funds rate, which has been stuck at 5.25% to 5.50% since July 2023. It’s unclear how more accurate data could have impacted the Central Bank’s decisions had it been reported correctly at the time. The Fed is largely expected to cut interest rates at its upcoming meeting in September.
However, the labor market is not in any immediate crisis; it’s just slowing down a little faster than expected.
The unemployment rate ticked down to 4.2% in August from 4.3% in July, according to the jobs report released on Sept. 6 by the Bureau of Labor Statistics (BLS). The unemployment rate had been below 4% since February 2022 — until May when the rate reached 4%.
Job gains came in below projections for August, with a total of 142,000. The consensus estimated monthly expectation was an increase of 160,000, according to Morningstar, an investing firm.
Job gains were primarily in construction and health care.
What are the weekly jobless claims?
Initial jobless claims decreased by 5,000 for the week ending Aug. 31, according to the report released on Sept. 5.
The weekly jobless claims, or initial claims, are the number of unemployment insurance claims filed in the past week. They provide an indicator of the strength — or weakness — of the labor market.
Jobless claims reached 227,000 for the week ending Aug 31. Last week’s revised level was 232,000.
The new four-week moving average — a measurement of the number of people who filed for unemployment insurance for the first time over the last four weeks — was 230,000, which is 1,750 lower than the previous week’s revised average of 231,750.
What's the insured unemployment rate?
Not all types of unemployment are included as part of the insured unemployment rate. It only includes "covered unemployment," as in people who receive unemployment benefits. Those who quit their jobs, for example, aren't included in the insured unemployment rate because they aren't eligible for unemployment benefits.
The advance seasonally adjusted insured unemployment rate — the rate of continuous covered unemployment claims divided by covered employment — was 1.2% for the week ending Aug. 24. The rate is unchanged from the unrevised rate for the previous week.
How are state labor markets doing?
States with the highest insured unemployment rates, week ending Aug. 17:
New Jersey: 2.8%
Rhode Island: 2.5%
Puerto Rico: 2.3%
California: 2.1%
Minnesota: 2%
Connecticut: 1.8%
New York: 1.8%
Pennsylvania: 1.8%
Massachusetts: 1.7%
Washington: 1.7%
States with the largest increases in initial jobless claims, week ending Aug. 24:
New York: +2,604
Michigan: +1,322
Georgia: +1,166
North Dakota: +992
Massachusetts: +748
States with the largest declines in initial jobless claims, week ending Aug. 17:
Texas: -1,515
Florida: -1,313
California: -965
Washington: -522
Virginia: -517
» MORE: How is the economy doing
How many jobs were added in August?
The economy added 142,000 (nonfarm) jobs in August, according to the BLS.
89,000 in July 2024
118,000 in June 2024
216,000 in May 2024
303,000 in March 2024
270,000 in February 2024
256,000 in January 2024
290,000 in December 2023
199,000 in November 2023
150,000 in October 2023
336,000 in September 2023
187,000 in August 2023
187,000 in July 2023
209,000 in June 2023
339,000 in May 2023
253,000 in April 2023
165,000 in March 2023
248,000 in February 2023
What is the current unemployment rate?
The current unemployment rate is 4.2% for August, down from 4.3% in July. The rate is higher than unemployment rates during 2023. In August 2023, the unemployment rate was 3.8%.
Is unemployment rising or falling?
The unemployment rate fell slightly from July to August after consistently rising each month since March, when it was 3.8%. It remains at or above 4.1% for the first time since November 2021.
How to calculate the unemployment rate
The unemployment rate is calculated by dividing the number of unemployed people by the number of people in the labor force. (The labor force is considered the sum of those who are currently working or looking for work.) The result is then multiplied by 100 to get a percentage:
Number of unemployed people / Labor force x 100 = X%, which is the unemployment rate
What is the labor force participation rate?
The labor force participation rate is 62.7% and was unchanged from July to August, according to the Bureau of Labor Statistics. The labor force participation rate is the percentage of the population that is working or looking for work.
The rate is calculated as the labor force divided by the total population that’s eligible to work. (The Bureau of Labor Statistics defines the total population that’s eligible to work as the “civilian noninstitutional population,” which refers to people ages 16 and older who are not in military service or incarcerated.) The result is multiplied by 100 to get a percentage:
Labor force / Civilian noninstitutional population x 100 = X%, which is the labor force participation rate
Since October 2002, the labor force participation rate was lowest in April 2020 (60.1%) and highest in June 2003 (66.5%), according to BLS data.
How is the job market right now?
In recent months, key labor market indicators — job openings, quit rate and layoffs — showed the tight labor market is beginning to loosen. But continuous job growth shows the job market remains resilient.
What does the Job Openings and Labor Turnover Summary report show?
The latest Job Openings and Labor Turnover Summary (JOLTS), released on Sept. 4, shows job openings were 7.7 million in July. The number of openings are down by 1.1 million compared to a year ago according to the report.
7.9 million in June 2024.
8.2 million in May 2024.
7.9 million in April 2024
8.4 million in March 2024.
8.8 million in February 2024
8.7 million in January 2024
8.9 million in December 2023
8.9 million in November 2023
8.7 million in October 2023
9.6 million in September 2023
9.6 million in August 2023
8.8 million in July 2023
9.6 million in June 2023
9.8 million in May 2023
10.1 million in April 2023
The seasonally adjusted job openings rate in July ticked down slightly compared to June at 4.6%. By comparison, the job openings rate in July 2023 was 5.3%.
The number of job openings in July rose in professional and business services (+178,000) and federal government (+28,000). Job openings declined in health care and social assistance (-187,000), state and local government, excluding education (-101,000), and transportation, warehousing, and utilities (-88,000).
The rate of layoffs in July (1.1%) increased slightly from the revised June rate (1%), according to the JOLTS report.
What is the quit rate?
The JOLTS report also shows the quit rate in July was 2.1% — up slightly from the revised rate of 2% in June. By comparison, in July 2023 the quit rate was 2.3%. Quits increased in information (+16,000).
Economists say quit rates are a key factor in the health of employment prospects since quitting shows that workers feel safe making a job switch within their sector or outside it entirely.
The current quit rate is consistent with pre-pandemic levels after peaking at 3% in both Nov. 2021 and April 2022.
Are wages increasing?
Wage growth is moderating from what it was a year ago but is still higher than it was pre-pandemic, according to data from the Federal Reserve Bank of Atlanta. The three-month moving average of median hourly wage growth — when measured over the previous 12 months — has slowed from its peak in the summer of 2022.
For July the three-month wage growth percent change was 4.7%, which is 0.6 percentage points lower than June’s three-month moving average rate (5.3%).
The 12-month moving average was 5.1% for July. By comparison, the percent change for July 2023 from a year prior was 5.5%. If you look back even further, at the percent change for July 2020 from a year prior, the rate was 3.7%.
» MORE: Is the pay gap real?
Below, the Federal Reserve Bank of Atlanta data for July shows a steady decline in the three-month moving average of wage growth compared to the peak in June 2022 and July 2022.
What does the Employment Cost Index Show?
Increases in compensation costs were greater in the first quarter of 2024, compared with the previous quarter, according to the most recent BLS Employment Cost Index, which measures wage and salary growth. Wages and salaries, as well as benefits comprise total compensation costs.
The April 30 report shows compensation costs increased by 1.2% in the first quarter of 2024 compared with the previous quarterly rates in 2023: 0.9% in the fourth quarter; 1.1% in the third quarter; 1.0% in the second quarter; and 1.2% in the first quarter.
But year-over-year measurements show that compensation cost increases in the first quarter of 2024 (4.2%) remain slower than during much of 2023:
December 2023: 4.2%
September 2023: 4.3%
June 2023: 4.5%
March 2023: 4.8%
For the 12-month period ending in March 2024, wages and salaries had a slower increase (4.4%) compared with the 12-month period ending in March 2023 (5%).
Over the same 12-month period, benefit costs also had a slower increase in the 12-month period ending in March (3.7%) compared to the 12-month period ending in March 2023 (4.5%).
Will unemployment rise?
The labor market is still tight, but is continuing to show signs of slackening.
The Federal Reserve hiked interest rates 11 times since March 2022 in an effort to bring down inflation, which is expected to eventually lead to a higher unemployment rate. However, the Fed has slowed down; the Central Bank paused rates at all of its meetings since July 2023. And the Fed has indicated it will likely cut interest rates sometime later this year, but it's unclear exactly when that might happen.
» MORE: What is the minimum wage?
When is the next jobs report?
The next jobs report will show data for September and it will be released on Oct. 4.
(Photo by Spencer Platt/Getty Images News via Getty Images)
