The U.S. unemployment rate jumped 0.3 points to 3.8% in August as more Americans decided to reenter the labor market.
According to data released Friday by the Bureau of Labor Statistics, more than 500,000 additional Americans joined unemployment in August, bringing the total number to 6.3 million. Meanwhile, the number of people participating in the civilian workforce increased by 736,000.
Overall, the U.S. added 187,000 jobs in August, which was higher than June and July figures. The new jobs came despite interest rate hikes meant to lower inflation. While interest rate hikes generally bring reductions to employment, the BLS data shows more people than ever are working.
The Bureau of Labor Statistics noted that the U.S. workforce participation rate increased to 62.8% in August 2023, compared to 62.1% in July 2022.
Continued wage increases could lead to more interest rate hikes
Americans experienced a 3.5% increase in average weekly earnings in the last year. Policymakers say this needs to come down to control inflation.
Prior to the last major recession in 2008, the federal fund effective rate was at a relatively high 5.25%. After spending nearly 15 years below 3%, that rate climbed above 5% again this year.
After months of high interest rates, 2008 started with 116 million workers. By the end of 2009, the U.S. had 107 million people in jobs.
Federal Reserve Chair Jerome Powell said the goal of the Federal Reserve is to get inflation to 2% a year. Based on the latest consumer price index, inflation stood at an annual increase of 3.2% in July 2023.
Also of interest to the Federal Reserve is wages. There was an average increase of $6 per week in wages as the average hourly rate for workers increased 8 cents to $33.82, according to the data released on Friday.
Whether the Federal Reserve opts to increase rates remains to be seen. The next time the Federal Reserve meets is Sept. 19-20, when interest rates could go up again.
"We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data," Powell said last week. "Restoring price stability is essential to achieving both sides of our dual mandate. We will need price stability to achieve a sustained period of strong labor market conditions that benefit all."
