Washington (United States) (AFP) – The US job market registered strong growth in August, government data showed on Friday, outperforming expectations and offering President Donald Trump’s Republican Party a boost ahead of upcoming midterm elections. Employment in the United States grew by 162,000 jobs in August, and the unemployment rate remained steady at 4.1 percent, the US Bureau of Labor Statistics (BLS) said in a statement. Employment expanded in the restaurant and bar sectors, and jobs in public schools bounced back from a contraction a month earlier. The strong report also revised up job numbers for June and July by a combined 55,000, indicating the US labor market remains in a state of steady growth.
The new data will be a boon for Trump, whose Republican Party is facing a stern test from Democrats in midterm elections in November, with the state of the world’s largest economy a key issue for voters. Stock markets were down on the news, however, with all eyes on the Federal Reserve’s next interest rate-setting meeting later this month. Strong job growth indicates a healthy labor market, which would allow the central bank to focus on its other mandate: keeping long-term inflation to its two-percent target. The Fed has missed that target for more than five years, with consumer inflation running at 3.3 percent in July. August data is due next week.
Price rises have been fueled by Trump’s war on Iran, which has sent energy prices skyrocketing, and his signature tariff policies. Inflation hit a three-year high in May, but has dropped since then. Several Fed policymakers have indicated that they would be open to raising interest rates if August’s data does not show a continuing downward trend. Three of the committee’s 12 voting members dissented at its last meeting in July, calling for an immediate hike.
Responding to the August jobs data, Trump made a surprising link between the Fed’s setting of interest rates and Washington’s trade ties with other countries. “Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” Trump posted on his Truth Social platform. “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
Restaurants and bars drive growth. Diane Swonk, chief economist at KPMG, told AFP that the August data was “reassuring” but cautioned that “one month does not a trend make.” “This report does suggest that the labor market is heating back up,” she said. “The labor market is now stronger, and this is worrisome for the Federal Reserve because now you have demand along with supply shocks.” Still, strong job growth was “welcome news for workers out there. Welcome news for people trying to make ends meet.”
Restaurants and bars added 59,000 jobs in August, well above the average gain of 12,000 over the last year, the BLS said. Employment in the local government education sector — which is mostly made up of public schools — increased by 42,000, largely offsetting a decrease from the previous month due to summer holidays. Overall employment in the sector has shown little net change since January. The healthcare sector, one of the major drivers of job growth in the United States as the population ages, added 13,000 jobs, a slower expansion than its average over the last year. Construction and manufacturing also made gains in the month, the data showed.
Kathy Bostjancic, chief economist at Nationwide, said the overall “across-the-board robust gains” were encouraging. “Today’s report supports our forecast that real GDP growth accelerates to at least three percent in Q3, reflecting a strong labor market, resilient consumer spending, and continued ebullient AI investment,” she said in a note. The information technology sector, however, lost 23,000 jobs, with cuts in computing infrastructure, data processing, and web hosting. Job losses in the sector have averaged around 8,000 per month for the last year, according to BLS data. Analysts say the sector is more susceptible to labor displacement due to its higher rates of adoption of artificial intelligence technology compared to other industries. Average hourly earnings increased by 3.1 percent year-on-year, still lagging behind inflation — indicating that many workers are seeing their salaries contract in real terms.
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