Although today’s employment report confirms an improving labor market, the improvement is moderating, and the unemployment rate remains near historical highs. U.S. nonfarm payrolls were in line with expectations, increasing by 1,371,000 in August versus expectations of 1,350,000. This follows increases of 4,781,000 and 1,734,000 in June and July, respectively. In August, a larger than expected increase in government payrolls (driven in part by temporary 2020 Census workers) offset a lower than expected increase in private payrolls. The unemployment rate declined to 8.4% in August (versus expectations of 9.8%) from 10.2% in July. The participation rate improved to 61.7% in August, from 61.4% in July, but remains well below the pre-pandemic rate of 63.4% in January and February. Furthermore, workers who classified themselves as employed but absent from work in the August survey understated the unemployment rate by about 0.7%. The U-6 underemployment rate, which includes those who are marginally attached to the labor force and employed part time for economic reasons, remained very high but eased to 14.2% in August from 16.5% in July.