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Employment Situation: Payrolls Miss Expectations as U-Rate Increases

September 1, 2017

Bottom Line: Payroll Employment rose by 156k in August, compared with market expectations for an increase of 180k. There were modest revisions to the previous two months which subtracted a total of 41k jobs. Some of the miss, as well as the negative revision, was in public education jobs, which the BLS had to estimate given the timing of this report, just one day after month-end. We would expect the potential for a substantial revision in this sector next month. Heath services was also weak, while construction jobs rose sharply. Overall, job creation has averaged 185k over the past 3 months vs. the past 12 months average of 175k.

The unemployment rate rose, as household employment dropped less than the increase in labor force. Over the past year, the unemployment rate has declined by 0.5 percentage points, the result of 1,784k more people finding jobs as 1,063k more people entered the labor force.

Hourly weekly earnings rose slightly after a moderate increase in July, while weekly earnings fell. The workweek fell with the 3-month average now at 34.5.

Payroll Employment rose by 156k in August, compared with market expectations for an increase of 180k. The prior 2 months were revised, lower in July by 20k and lower in June by 21k.

Government jobs FELL by 9k. Consequently, private sector jobs ROSE by 165k. Private education jobs rose by 9k. State and Local education jobs fell by -2k. Overall employment is now 1.4% ABOVE its year ago level,

Over the past 12 months, 2,097k jobs have been created.

  • In August, the job gains were in Trade, Transportation & Utilities (+7k with 1k of those in Retail Trade),
  • Professional & Business Services (+40k ),
  • Manufacturing (+36k),
  • Construction (+28k),
  • Education & Health Services (+17k),
  • Other Services (+16k),
  • Financial Activities (+10k), and
  • Leisure & Hospitality (+4k).

Jobs were shed in
  • Information (-8k), and
  • Government (-9k).

The Unemployment Rate ROSE by 0.1 percentage points in August to 4.4%, compared with market expectations for a no change to 4.3%.

Household employment fell by 74k while the labor force increased by 77k, resulting in an increase in the number of unemployed of 151k.

The Labor Force Participation Rate was UNCHANGED at 62.9%. The Employment-Population Ratio FELL by 0.1 percentage points to 60.1%.

Hourly Earnings ROSE by 0.1% in August, below market expectations of 0.3%. Hourly earnings are now 2.5% ABOVE their year ago level.

Weekly Earnings FELL by 0.2%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 2.8% ABOVE their year ago level.

The Average Workweek FELL by 0.1 to 34.4 hours, BELOW the market consensus at 34.5 hours.

Article by Contingent Macro Advisors