United States: Job Creation Rebounds in August

After three months of fairly lacklustre US job growth, the August result is welcome news. It is also consistent with some recent positive signals, including low unemployment insurance claims, stable announced layoffs and renewed household confidence about the ease of finding a job. Even so, the gain of 162,000 jobs was nearly triple the consensus forecast. It was also the strongest increase since last March. In addition, the August data were accompanied by upward revisions to the June and July results, adding a total of 55,000 jobs and, most notably, erasing the decline initially reported for July.

The August rebound was fairly broad-based. Of the 250 industries tracked, 55.6% recorded an increase in employment—the highest share since January 2024. Manufacturing posted a notable gain of 16,000 jobs, marking a third consecutive increase. Moreover, employment rose in 61.1% of the 72 manufacturing subsectors, the highest proportion since October 2022. Gains in primary metals and machinery manufacturing more than offset a decline in the motor vehicle sector. Employment also grew solidly in construction, General merchandise retailers and temporary help services. The strongest increase, however, was in food services, which added 59,200 jobs, closely followed by local government education, with a gain of 41,900.

The household survey results for August were even more surprising and underscore the considerable volatility of this survey. Although the unemployment rate held steady, this masked an employment gain of 569,000—the largest since November 2023, excluding annual methodological adjustments—and an increase of 683,000 in the labour force. In both cases, the advances followed several months of pronounced declines.

The August labour market results were particularly positive. The key question now is whether this momentum will continue through the fall. The sharp gains in food services and education services may give way to a lull, but could the broad-based trend continue—or even gather pace—particularly in manufacturing? Or will job growth revert to a steadier, nearly anaemic pace? The next few reports could be especially important for the Federal Reserve, as still-elevated inflation leaves it with somewhat less room to manoeuvre.