KANSAS CITY, Mo. — The U.S. Labor Department says employment growth slowed in August, evidence that higher interest rates may be helping to fight inflation.

The Federal Reserve Bank faces a difficult task in trying to slow price increases without throwing too many people out of work.

Fed bankers may see some evidence in this jobs report that higher interest rates are starting to cool off an overheated economy and reduce inflation.

The Labor Department said employers added 315,000 jobs in August and the government said more people are getting back into the workforce.

The labor participation rate rose three-tenths of a percentage point, another encouraging sign.

All of this means the nation now has created more jobs than the 22-million that were lost at the start of the pandemic in 2020.

This happened while the nationwide unemployment rate increased slightly in August to 3.7%, that’s still near a 50 year low.

“Overall it’s a good jobs report,” said Frank Lenk, an economist at the Mid America Regional Council. “It’s strong enough to keep the labor market in good shape but not as high as it has been, which the Fed will want to see. It’s still not where they want it to be, so I’m guessing we’ll continue to see some rate increases.”

The Federal Reserve has been raising interest rates to put the brakes on price increases and slow growth in the economy.

Higher interest rates make it more expensive for people and businesses to borrow and spend.

“We want to see continued healthy gains in jobs across industries,” said Heather Boushey, a member of President Joe Biden’s Council of Economic Advisors. “We would like to see real wage gains for workers because of high inflation. Even though wages have been rising they are not quite keeping pace. But as we recover from this historic pandemic, as we get all the folks back into the labor force who were there before, we will get back to see the economy finding that right equilibrium and hopefully pull down this high inflation.”

Fed bankers still are expected to consider yet another interest rate hike later this month as inflation continues at the highest levels seen in 40 years.

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