The labor market might not be as weak as it appears

• In a speech this weekend, Federal Reserve governor Michelle Bowman said "the recent rise in unemployment may be exaggerating the degree of cooling in labor markets."
• "The rise in the unemployment rate this year largely reflects weaker hiring, as job searchers entering the labor force are taking longer to find a job, while layoffs remain low," Bowman added.

By the numbers: The unemployment rate has risen 0.9 percentage point from the low point of 3.4% last spring.

• That includes a 0.2 percentage point increase last month alone that triggered the Sahm Rule, which in the past has signaled the economy is in a recession. But the increase comes with a few caveats.
• While the number of unemployed Americans rose by 352,000 last month, the overwhelming share — about 70% — were laid off temporarily, suggesting an imminent return to work.

Economists point to Hurricane Beryl, which hit Texas in the week the government surveyed workers for the report, as a factor that upped temporary layoffs.

• Roughly 430,000 people last month reported not being at work because of bad weather — about 10 times higher than the average July reading, going back to 1976, according to Bank of America.
• The intrigue: The government said the hurricane had "no discernible effect" on the July jobs numbers. But private sector economists appear to disagree, noting Beryl's impact.

Zoom out: More workers entering the labor force can also push up the unemployment rate.

• While roughly 67,000 people became employed last month, a far larger number (about 420,000) joined the workforce but didn't necessarily find jobs.

What they're saying: "An expansion of the labor force, rather than a fall in employment, has spurred the rise in the unemployment rate up to now — a key difference from previous cycles at the start of a recession," Satyam Panday, an economist S&P Global Ratings, wrote in a note.

• As of June, Panday said, unemployed Americans entering the labor force accounted for 0.3 percentage point of the jobless rate increase since last April.

The other side: Goldman Sachs is less certain that temporarily laid-off workers will report being employed next month.

• The firm's economists said the largest increase in temporary layoffs came in the leisure and hospitality sector and construction industries — and in states, like California, that were not impacted by unusually bad weather.
• "These patterns make us somewhat less confident that most of the July increase in the unemployment rate will revert in the near-term," Manuel Abecasis, an economist at Goldman Sachs, wrote last week.
• But Abecasis noted that "temporary layoffs are a noisy indicator, and other indicators continue to suggest that layoffs remain low."