The job growth marked an increase from July's revised gain of 157,000 but still pointed to a moderating pace of hiring compared with earlier this year. The unemployment rate rose from 3.5% to 3.8%, the highest level since February 2022 though still low by historical standards.
The Fed wants to see hiring slow because intense demand for labor tends to inflate wages and feed inflation. The central bank hopes to achieve a rare “soft landing,” in which its rate hikes would manage to slow hiring, borrowing and spending enough to curb high inflation without causing a deep recession.
The Fed wants to see hiring decelerate because strong demand for workers tends to inflate wages and feed inflation. Instead of slashing jobs, companies are posting fewer openings — 8.8 million in July, the fewest since March 2021. And American workers are less likely to leave their jobs in search of better pay, benefits and working conditions elsewhere: 3.5 million people quit their jobs in July, the fewest since February 2021. A lower pace of quits tends to ease pressure on companies to raise pay to keep their existing employees or to attract new ones.