U.S. job market rebounds as employers add 162,000 jobs

The U.S. job market rebounded in August as employers added a surprising 162,000 jobs. The unemployment rate stayed at a low 4.1 per cent.

The jobs report, issued by the Labor Department Friday, could be good news for U.S. President Donald Trump two months before midterm elections in which the health of the economy is weighing on voters’ minds.

Hiring far exceeded the 65,000 forecasters had expected, according to a poll by FactSet. Labor Department revisions also looked good, adding 55,000 to June and July payrolls. Employers created 21,000 jobs in July; the Labor Department had originally reported that they’d cut 23,000.

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And the U.S. labor force — the number of people working or looking for work — jumped by 683,000 last month after falling in June and July.

Companies have been contending with a shortage of workers — the result of Trump’s immigration crackdown and the retirement of baby boomers — and some are responding by using technology for tasks that human beings used to do.

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But employers have been reluctant to let go of the staff they have, so most Americans enjoy unusual job security and unemployment is low.

“It’s a very strange labor market,’” David Kelly, chief global strategist at J.P. Morgan Asset Management, wrote in a commentary Monday.

The No. 1 puzzler: Hiring is weak, but layoffs are rare.

Employers haven’t been eager to take on new workers. The Labor Department reported Tuesday that gross hiring — before subtracting people who lost or left their jobs — fell 5 per cent to fewer than 5.1 million new jobs.

The United States doesn’t need as many jobs as it did until recently to keep the national unemployment rate from rising. Trump’s immigration crackdown and baby boomer retirements mean fewer people are competing for work. More than 1.3 million people have dropped out of the U.S. labor force over the past year.

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As a result, the “break-even’’ rate of monthly hiring, 155,000 in 2023-2024, has dropped, perhaps to nearly zero, according to a Federal Reserve study.

Instead of looking to hire from a diminished pool of available workers, “businesses are increasingly focused on boosting efficiency through technology and AI and increasingly seek to do more with their existing workforce,” EY-Parthenon economists Gregory Daco and Lydia Boussour wrote in a commentary this week.

Still, even if they aren’t hiring aggressively, companies are reluctant to let go of the staff they have. They retain memories of the unexpected labor shortages that followed the end of COVID-19 lockdowns.

So unemployment remains low. For the past year, the number of people applying each for unemployment benefits – a proxy for layoffs — has stayed in a historically low range of around 200,000 to 230,000.

The result is what economists call a “no-hire, no-fire” labor market in which those who have work enjoy job security, but times are tough for young workers trying to land entry-level jobs or unemployed people seeking to get back to work.