The report Friday from the Labor Department showed the unemployment rate edged down from 3.7% to 3.5%, back to its July level. The unemployment rate in July and this month reached the lowest level since the pandemic erupted two years ago. The numbers are a dose of encouraging news that may mean the Federal Reserve’s drive to cool the job market and ease inflation is starting to progress.
A survey of economists by the data firm FactSet predicted that employers would add 250,000 jobs.
The Fed is engaged in an epic battle to rein in inflation, which was running at a 40-year high in June and has eased only slightly since. The Fed has raised its benchmark interest rate five times this year. It is aiming to slow economic growth enough to reduce annual price increases back toward its 2% target.
It has a long way to go. In August, one key measure of year-over-year inflation, the consumer price index, amounted to 8.3%.
Fed Chair Jerome Powell has warned bluntly that the inflation fight would “bring some pain,” notably in the form of layoffs and higher unemployment. Some economists remain hopeful that despite the persistent inflation pressures, the Fed will still manage to achieve a so-called soft landing: Slowing growth enough to tame inflation, without going so far as to tip the economy into recession.
The Associated Press contributed to this report.