US Economy Adds 162,000 Jobs in August, Focusing Attention Back to Inflation

President Trump welcomed the strong hiring report in August, which showed a burst of 162,000 jobs added to the US economy. This comes two months before the midterm elections and has put the focus squarely back on inflation.

The Labor Department reported that average hourly wages rose 3.1 percent last month from a year earlier, the weakest year-over-year increase since May 2021. Restaurants and bars added 59,000 jobs, construction companies 22,000, and manufacturers 16,000. Factory jobs are up by 58,000 since hitting a recent low in December.

Diane Swonk, chief economist at KPMG, called the report 'incredible', saying it's a 'summer heatwave'. The US labor force jumped by 683,000 last month after falling in June and July. A broad measure of the unemployment rate dropped to 7.7 percent, the lowest in more than a year.

The strong hiring numbers have increased the likelihood that the Federal Reserve will raise its key short-term interest rate when it next meets on September 15-16. Fed Chair Kevin Warsh said last week that inflation remains too far above the central bank's 2 percent target and added that without further progress, the Fed would 'have work to do'. With hiring seemingly healthy, the Fed's focus will shift to a critical inflation report due next week.