STEVE INSKEEP, HOST:
As we approach the Labor Day weekend, we just got an update on the labor market. U.S. employers added 162,000 jobs in August. We're told that is better than expected. Happily, NPR Scott Horsley is still on the same job, as always, helping us to understand the numbers. Scott, good morning.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: One hundred and sixty-two thousand. What does that mean?
HORSLEY: Well, it does mean hiring was stronger in August than the month before, and it turns out July wasn't quite so weak as initially reported. The Labor Department's original tally said employers cut jobs in July, but revised figures show there was actually a small gain that month. A lot of the weakness in the original July report was a loss of public school jobs, and that was largely reversed in August. Healthcare and hospitality also added workers last month. So did factories.
Overall, the pace of hiring for August was above average for what we've seen this year. You know, a year ago this summer, Federal Reserve governor Chris Waller was really worried about the job market. He was pretty outspoken in calling on the Fed to lower interest rates to prop it up. Today, though, Waller's feeling better about the employment outlook. He spoke at a Reuters news agency event yesterday and Waller said he thinks the job market has stabilized.
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CHRIS WALLER: Job creation, though a bit volatile, is close to and probably a bit above estimates of what it takes to keep pace with the slow growth in the labor force.
HORSLEY: The labor force has generally been growing slowly this year as baby boomers retire and immigration dries up. But last month, we actually saw a pretty big influx of workers. More than 600,000 people came off the sidelines in August and joined the workforce. Most of them found jobs, so that's encouraging.
INSKEEP: I'm just thinking this through. The Fed is supposed to keep inflation under control. It's also supposed to keep an eye on hiring, but it looks like if inflation is high, which we know, and hiring seems to be doing fine, there is no interest rate cut coming.
HORSLEY: Yeah. Probably not. Inflation is high. You know, the price of diesel fuel just today hit a record high - $5.85 a gallon.
INSKEEP: Wow.
HORSLEY: Jumped almost 7 cents overnight. And, you know, so the question for the central bank now is, do we raise interest rates to tamp down inflation, or do we just stand pat? And after the strong jobs report, investors raised the odds of a September rate hike to about 60%. Last week, the chairman of the Fed, Kevin Warsh, said in Jackson Hole he doesn't think interest rates are doing a lot right now to slow the U.S. economy or put the brakes on inflation. Big tech companies, for example, continue to borrow a ton of money to build out data centers, and that's goosing the stock market. Waller, on the other hand, says the interest rates that you and I face when we try to borrow money, those do feel like a little bit more of a heavy lift.
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WALLER: There's a difference between financial conditions on Wall Street...
UNIDENTIFIED PERSON: Yeah.
WALLER: ...And financial conditions on Main Street. Mortgage rates are not low.
UNIDENTIFIED PERSON: Right.
WALLER: Auto loans are not - rates are not low. How - mainstream America is staring at, you know, credit spreads and all this other bond - corporate bond rates. Like, what does that do for me? I mean, I don't get it.
HORSLEY: Mortgage rates topped 6.7% this week, according to Freddie Mac. That clearly is a drag on the housing market, but construction companies are still hiring. They added 22,000 jobs last month. Now, less than half those jobs are in home building. The majority are in nonresidential construction, including the people building all those data centers.
INSKEEP: I'll just mention one data point for how insane interest rates are. My kid got a credit card offer - 27.9%.
HORSLEY: (Laughter).
INSKEEP: I threw that right in the trash. But anyway, even though interest rates are bad, unemployment seems pretty low.
HORSLEY: It is. Even with that big influx of workers last month, the unemployment rate held steady at 4.1%. Despite the low jobless rate, though, employers aren't having to pay a whole lot to attract new workers. So average wages in August were up just 3.1%. That's a smaller increase than we saw in July, and probably not enough to keep pace with inflation. In recent months, prices have been climbing faster than paychecks, and that means the average worker's wages don't stretch as far, and no wonder people feel like they're losing ground.
INSKEEP: NPR's Scott Horsley. Thanks.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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