Unemployment Rate Increase Despite Addition of 187,000 Jobs

The age-old belief is that when the economy spawns a multitude of jobs within a month, the unemployment rate should ostensibly drop. Yet, this August, that principle was defied.

by Faruk Imamovic
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Unemployment Rate Increase Despite Addition of 187,000 Jobs
© Getty Images News/David McNew

The age-old belief is that when the economy spawns a multitude of jobs within a month, the unemployment rate should ostensibly drop. Yet, this August, that principle was defied.

A Surge in Unemployment Amidst Job Additions

The US economy, in a paradoxical twist, saw the addition of 187,000 new jobs in August, reports CNN.

However, this did not translate to a drop in the unemployment rate. Instead, it shot up to 3.8% from 3.5% in July. This uptick is the steepest monthly rise since May. Excluding the initial stages of the pandemic, such a significant one-month rise was last observed in November 2011.

But why this anomalous increase? The raw numbers provide a clue.

Unpacking the Numbers

The August data indicates that the number of unemployed individuals surged by 514,000, amounting to a total of 6.4 million. In contrast, the count of the employed grew by 222,000, reaching a staggering 161.5 million.

Consequently, the labor force inflated by a whopping 736,000 people, bringing the total to 167.8 million. By crunching these figures, the result is the 3.8% unemployment rate. These statistics signify that even if a significant portion wasn't freshly out of jobs, more individuals commenced their job hunt actively in August.

Curiously, the number of people who secured jobs was comparatively lesser. Diving deeper into the sectors, a survey of workers unveiled a drop in employment within the transportation and warehousing segment. There were 34,000 fewer jobs in this sector in August compared to the previous month.

Interestingly, this specific dip is absent in the business survey, which offers a glimpse into why, despite the anticipated job growth in August, the unemployment rate unexpectedly rose. August's employment figures serve as a compelling reminder that while numbers can provide a structured overview, it's the intricate details beneath that offer genuine insights.

The economy might be adding jobs, but not all segments and sectors are benefitting equally, and not all job-seekers are finding their match. As experts continue to analyze these figures, it becomes clear that the relationship between job additions and unemployment isn't always linear.

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