The U.S. added 162,000 jobs in August, the Labor Department reported Friday, a much-stronger-than-expected result that suggested the labor market shook off its early-summer doldrums.

The numbers

The unemployment rate stayed steady at 4.1%. That leaves it at a historically low level that indicates the labor market remains generally healthy.

Economists polled by The Wall Street Journal had forecast the report would show the economy gained just 53,000 jobs, and an unemployment rate of 4.1%

What this means for the Fed

Friday's jobs report will likely allow the Federal Reserve to focus squarely on inflation.

"With economic activity and the labor market in good shape, they are not a large factor in my determination of the appropriate setting of monetary policy," Fed governor Christopher Waller said on Thursday.

The Labor Department's consumer inflation report comes out next Friday. The Fed meets later this month.

A stronger June and July

The jobs counts for both June and July were also revised higher. The Labor Department now says that the economy added 21,000 jobs in July, rather than losing 23,000 jobs. June's jobs gain was revised up to 31,000 from 20,000.

Worker pay

Average hourly earnings rose 3.1% from a year earlier, indicating that pay continues to struggle to keep up with inflation. Consumer prices were up 3.4% from a year earlier in July.

High gasoline prices continue to strain budgets. A gallon of regular averaged $4.07 nationally in August, according to AAA, versus $3.95 in July. On Friday, it averaged $4.15.

Where job gains were strongest

The job gains were broad-based.

Food services and drinking places were a standout, with an increase of 59,000 jobs. The sector had shed 17,000 jobs over the prior two months.

Similarly, local government education gained 42,000 jobs after losing 58,000 jobs the prior month.

Manufacturing was among the sectors registering job gains, as was healthcare.

The information and finance sectors shed jobs. While economists are divided over how artificial intelligence will affect the job market, those sectors are generally viewed as among the most exposed to the technology.

A new normal for job growth?

The U.S. has entered a phase where economists believe the country doesn't have to add many jobs a month to keep the labor market steady.

The population is aging-the youngest of the baby boomer generation is eligible for Social Security retirement benefits this year-while the clampdown on immigration has reduced the supply of new workers into the labor force. In other words, the U.S. simply doesn't have enough available people to deliver significant job growth.

Economists at Bank of America estimate that employment growth of about 20,000 jobs a month is sufficient to keep the unemployment rate from rising. Historically, that is an extremely low level of job growth. The average pace over the quarter-century before the pandemic was about 120,000.

Low hire, low fire

Meanwhile, the job market remains enmeshed in an environment where employers aren't letting many people go, but also seem reluctant to bring new workers on. Initial claims for unemployment benefits, for example, are near their lowest levels on record, but Labor Department figures released earlier this week show that hiring rates are also depressed.

As a result, people who are secure and happy in their work have little to worry about. But for people who are trying to break into the job market, such as college graduates, or those looking for a change, it is challenging. In an August Gallup poll released earlier this week, only 34% of respondents said it was a good time to find a quality job.