The unemployment rate in the United States moved to 3.7 percent in August, reflecting a labor market that remains steady despite a brief cooling compared to the peak pandemic period. The figures suggest a workforce still operating near pre-pandemic levels, with ongoing resilience across key sectors.
Unemployment rose by 344,000 in August, bringing the total to six million, according to the latest release from the Bureau of Labor Statistics. This shift comes as the economy added 315,000 jobs in August, a pace that slows from the surge seen in July and returns closer to the averages observed earlier in the year.
The August data indicate a modest slowdown in job creation after a strong July. The broader context shows a labor market that has been cooling gradually from the exceptionally tight conditions seen during the recovery phase, aligning closely with levels seen around February 2020 prior to the pandemic.
Despite the softer month for payrolls, overall unemployment has declined from the highs hit in April 2020 and has shown only two small upticks in the current cycle, both limited in size. The August tally of 315,000 new jobs remains above historical norms but marks a softer pace than mid-year projections.
Across industries, professional and business services, health care, and retail reported notable gains in August, reinforcing the underlying strength of the labor market even as the numbers cooled.
Good news for Biden
Strength in the U.S. labor market is a key point of pride for the administration and has been a central argument in its efforts to steer the economy away from recessionary concerns. After the release, observers noted that the data are shaping a narrative of ongoing public support for economic policy measures aimed at boosting employment and growth.
President Biden has consistently highlighted job creation as a sign of progress since taking office in January 2021, pointing to millions of new positions and claiming the United States has experienced faster growth in employment than in many other periods. The economy did enter a technical recession in the second quarter of the year, with two consecutive quarters of GDP decline, though the administration has maintained that employment indicators do not confirm a traditional recession.
There are also signs that inflation may begin easing, with price pressures showing some relief in recent months.
Restrictive monetary policy
Even with optimistic signals, the cooling trend comes amid a backdrop of a deliberate tightening of monetary policy. Federal Reserve officials have signaled that restoring price stability will likely require maintaining a restrictive stance for a period, a move that can influence labor market dynamics in the near term.
BLS data point to solid gains in professional services, health care, and retail, underscoring broad-based improvement across several sectors. Among demographic groups, unemployment in August rose for adult males and Hispanics, while female workers, adolescents, and several racial groups showed limited change.
Within the unemployed, the share displaced from permanent roles grew in August, while those in temporary unemployment remained roughly steady. Long-term unemployment saw little change, continuing to account for a meaningful portion of total unemployment.
Since May 2020, the BLS has included questions to assess pandemic-related effects on the labor market, such as patterns of remote work. The data suggest a notable portion of workers teleworked in August, alongside a continuing share of people who could not work due to employer closures or job losses during the pandemic.
For those not in the labor force in August, a portion cited health concerns as a barrier to finding work, maintaining a relatively stable level from the prior month.