The US Labor Department on Friday released its August jobs report. According to forecasts, the number of jobs increased by 65,000, and the unemployment rate rose to 4.2%. This was reported by Qazaqyia.kz citing Associated Press.
In July, the number of jobs unexpectedly fell by 23,000. Economists expect a recovery in school jobs, which fell by 50,000 in July, possibly due to a statistical glitch.
Labor market situation
According to David Kelly, chief global strategist at J.P. Morgan Asset Management, "It's a very strange labor market." The puzzle is that hiring is weak, but layoffs are rare.
According to the Labor Department, gross hiring fell 5% to fewer than 5.1 million. Since the start of the year, employers have added an average of 61,000 jobs per month, up from 9,700 last year, but below the 166,000 monthly average in 2023-2024.
Labor shortage
Due to strict immigration policies and baby boomer retirements, the labor force is shrinking. Over the past year, more than 1.3 million people have left the labor force. This has lowered the "break-even" rate: previously 155,000 jobs per month were needed, now it is near zero.
The Trump administration's decision on July 27 to revoke work authorization for 330,000 Haitian and Syrian immigrants may worsen labor shortages. These individuals are not counted in official unemployment because they are not allowed to seek work.
Role of technology and AI
According to EY-Parthenon economists, businesses are increasingly focusing on boosting efficiency through technology and AI. Nevertheless, companies are reluctant to lay off workers, remembering the unexpected labor shortages after the pandemic.
As a result, a "no-hire, no-fire" labor market has emerged: those with jobs enjoy security, while jobseekers struggle.