US releases employment report for August, important data for Fed and candidates

Job growth picked up in August after being sluggish the previous month, providing some relief after sharp declines earlier this summer roiled financial markets and threatened to derail the momentum built by Vice President Kamala Harris and her campaign team.

As the government announced on Friday, 142,000 new jobs were created in the US economy last month. Although this is slightly below analysts' expectations, it represents a significant improvement over the downwardly revised increase of 89,000 in July.

The unemployment rate fell slightly in August, falling from 4.3 percent in the previous month to 4.2 percent. However, at the beginning of the year it was still at 3.7 percent.

The new report is likely to reinforce the Fed's earlier announcement that it would begin cutting interest rates by a quarter of a percentage point later this month, after aggressively raising them in 2022 and last year to curb inflation.

State-by-state employment numbers for August won't be available for two weeks, but national data suggest California may continue to lag the nation in job growth.

Nationally, some jobs were lost in the film and information industries, and employment in other sectors important to California, such as business services and transportation and warehousing, also stagnated last month. California's latest unemployment rate for July was 5.2 percent, the second highest in the country after Nevada.

Politically, the latest report could be a welcome relief for Harris' campaign. Although most voters typically make their minds up in the summer of an election year, July's employment numbers and declining job openings, coupled with volatile stock markets, have heightened recession concerns. A poor report in August would have given former President Trump more to talk about in the final weeks before the election, including next week's debate.

Although the economy and labor market have recovered well since the end of the pandemic, the Biden administration's public image has been severely damaged by persistently high consumer prices. In June 2022, inflation reached 9.1 percent, the highest level in four decades.

Since then, inflation has fallen significantly to below three percent, but overall prices are still about 20 percent higher than before the pandemic – and this continues to weigh on consumers' perceptions of the economy.

Job growth in August was just below the 160,000 figure economists on average had expected. Analysts had hoped for a rebound from weak July performance, which was held back by temporary layoffs and the impact of Hurricane Beryl and the California wildfires.