Key takeaways

  • Total non-farm payroll employment increased by 187,000 in August 2023, according to the latest data from the Bureau of Labor Statistics.
  • Despite the steady pace of jobs growth, the unemployment rate jumped to 3.8%, its highest level since February 2022.
  • Average hourly earnings rose 0.2% in August – a moderating pace of wage growth that could suggest easing inflationary pressures.
  • It remains to be seen how the complexities of the August jobs data will influence upcoming policy decisions by the Federal Reserve.

The latest report released by the Bureau of Labor Statistics (BLS) showed that the U.S. labor market added 187,000 jobs in August 2023. Despite this steady pace of hiring, the unemployment rate jumped 0.3 percentage points to 3.8%, marking its highest level since February 2022.1

The headline number of 187,000 additional jobs in August represents an uptick from the downwardly-revised 105,000 and 157,000 positions added in June and July, respectively. However, August jobs growth still marks a continued cooldown from the average monthly gains of 271,000 jobs reported over the prior 12 months.2

While the unemployment rate rose to an 18-month high in August, the 3.8% level remains relatively low by historical standards. The jump in unemployment also came amid an increase in job seekers, as the civilian labor force grew by 736,000 during the month.

“The whisper number, or unofficial forecast, for August payrolls was weaker than the 187K gain we got, so that is encouraging. While some might be concerned about the uptick in the unemployment rate from 3.5% to 3.8%, it looks like it is mostly driven by an increase in the labor force as opposed to a jump in those unemployed,” remarked Shawn Snyder, Executive Director, Global Investment Strategist for J.P. Morgan. The BLS counts only those who are actively looking for work in its unemployment calculation, so the number of workers entering or rejoining the job market contributed to the uptick in the unemployment rate.3

Although the persistent level of hiring suggests that the labor market remains resilient, the BLS also reported a more moderate pace of wage growth in August, which could indicate a reprieve in inflationary pressures. Average hourly earnings for all employees rose 0.2% in August, compared with a bump of 0.4% reported in July. This caused the year-over-year (YoY) wage increase to dip to 4.3% from the level of 4.4% recorded in the previous month.4

Jobs growth in the construction industry trended higher in August, with gains of 22,000 slightly higher than the average monthly additions of 17,000 over the prior 12 months. Employment in social assistance saw similar results, with August’s increase of 26,000 topping the monthly average of 22,000 jobs added over the previous year. Healthcare posted strong gains, adding 71,000 positions in August. Despite monthly gains of 40,000 in leisure and hospitality, employment in the industry remains 1.7% below the pre-pandemic level of reported in February 2020.5

Weakness in the labor market was concentrated in the transportation and warehousing industry, which shed 34,000 jobs in August. These declines stem primarily from the closure of a key trucking business.6

Employment outlook

The addition of 187,000 jobs in August speaks to persistent strength in the labor market, even as the pace of hiring continues to cool from the accelerated levels of 271,000 over the prior 12 months.7

The uptick in unemployment may not be the most welcome news for those seeking jobs or monitoring the labor market. However, the labor force participation rate – the percentage of people who are either employed or seeking a job – rose 0.2 percentage points in August after remaining flat over the prior two months. At 62.8%, labor force participation has reached its highest level since the sharp declines witnessed at the onset of the pandemic.8

In addition to the previously mentioned trucking shutdown, the ongoing strikes by actors and writers in Hollywood may have dampened jobs growth in August.

Portfolio implications

Labor market data can have a significant impact on the Federal Reserve’s monetary policy decisions, which in turn can affect the performance of many types of investment assets. The August jobs report paints a mixed picture of the U.S. economy, with persistent hiring offset by moderating wage growth as Fed officials gauge the likely trajectory of inflation in the months ahead. “The Fed will likely be encouraged by the subtle loosening of the labor market. The risk is that these subtle trends become less subtle and accelerate, but so far, so good,” Snyder noted.

In a late-August speech in Jackson Hole, Wyoming, Fed Chair Jerome Powell addressed how developments in the job market could shape the path forward on interest rates. “The rebalancing of the labor market has continued over the past year but remains incomplete,” Powell said. According to the Fed chief, “Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response.”9

Investors will want to keep an eye on further developments in the labor market and other factors that may influence the Fed’s action on rates as they look to optimize their portfolios heading into the fall season. On this, Snyder says, “The stock market is clearly watching the bond market. The weaker employment data seen over the week has taken some steam out of the “higher-for-longer” narrative. With longer-dated rates coming back down a bit, U.S. stocks have clawed back some of their August losses.”

The bottom line

Powell stated that the Fed remains “prepared to raise rates further” as needed to continue reducing inflation until it reaches the central bank’s target of 2%.10 We have yet to see how the complexities of the August jobs data will influence the Fed’s upcoming moves.

At least in the near term, the Federal Reserve appears likely to maintain rates at current levels at its next meeting, which is set for September 20. According to the Chicago Mercantile Exchange (CME) FedWatch tool, futures pricing suggests a 93% probability that the fed funds rate will remain at 5.25% to 5.5% through September.11 To learn more about what implications these findings may have on your current investment strategy, connect with a J.P. Morgan advisor today.



Bureau of Labor Statistics. “The Employment Situation — August 2023,” (September 1, 2023).
















Board of Governors of the Federal Reserve System. “Speech
– Inflation: Progress and the Path Ahead,” (August 25, 2023)




CME Group. “CME FedWatch Tool.”

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