On Friday, the U.S. Labor Department reports that U.S. employers added 187,000 jobs in August, a robust rate but one still well below the monthly average over the past year as unemployment grew to 3.8%, the highest since February 2022.

While job growth in August was up over July’s 157,000, it was still well shy of the 271,000 per month average over the last 12 months, according to the Labor Department. And, looking at the last three months, total job creation came in at the lowest level in three years. Wage growth also slowed in August, moving up .2%, the slowest month-over-month uptick in over a year.

The new data will be seen as further evidence that the Federal Reserve’s long-running battle to quell record inflation through an aggressive rate hike strategy is taking a broader hold. Annual inflation stands at 3.2% and has been on steady decline since hitting 9.1% in June 2022, but the U.S. labor market has been slower to react to the policy. The tight labor market has helped drive up wages, a factor seen as one of the engines of inflation as goods manufacturers and service providers respond to higher labor costs by passing price increases on to consumers.

“The 187,000 gain in non-farm payrolls, jump in the unemployment rate and slowdown in wage growth in August all add to the evidence that labor market conditions are approaching pre-pandemic norms,’’ Andrew Hunter of Capital Economics wrote in a research note, per The Associated Press.

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A big jump in the number of people entering the job market, 736,000 in August, also helped push the labor participation rate to 62.8%, its highest level in 312 years. Earlier this week, data released in the Labor Department’s Job Openings and Labor Turnover Summary showed the ratio of unfilled job openings to available workers came in at about 1.4, a ratio that had been running around 2-to-1 for much of the past two years.

At a conference of central bankers held in Jackson Hole, Wyoming, last week, Fed Chairman Jerome Powell signaled the monetary body was ready to assess further hikes to its benchmark rate if the telltales of a too hot economy, like the labor imbalance and associated high wage growth, didn’t show signs of cooling down.

“We have tightened policy significantly over the past year,” Powell said. “Although inflation has moved down from its peak, a welcome development, it remains too high.

“We’re prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

At its July meeting, the Federal Reserve’s Open Market Committee announced a .25% hike to its benchmark lending rate, the Fed’s 11th rate increase since March 2022.

But, some economists believe the latest jobs data will compel the monetary body to take a pause on rate hikes for at least the near term.

“This is probably the final nail in the coffin for the chances of another rate hike by the Fed in September,” Christopher Rupkey, chief economist at FWDBONDS in New York, told Reuters.