Employment Situation: Trend Still Slowing Modestly
September 6, 2019
Bottom Line: Nonfarm payroll growth slowed in August, coming in below expectations, despite strong gains in government jobs related to census hiring. Retail trade shed jobs, while leisure/hospitality, construction and manufacturing saw modest gains. After slowing a touch in recent months, average hourly earnings ticked up again with the last three months showing a modest re-acceleration in wages relative to the last six- and 12-months. Total weekly paychecks (including hours worked and wages) ticked higher. On a trend basis job growth continues to slow modestly while wage gains remain modest to moderate as employers still seem willing to pay when they can find workers with the skills they need. Payroll Employment rose by 130k in August, compared with market expectations for an increase of 165k. The prior 2 months were revised, lower in July by 5k and lower in June by 15k. Government jobs ROSE by 34k. Consequently, private sector jobs ROSE by 96k. Private education jobs fell by 5k. State and Local education jobs rose by 8k. Overall employment is now 1.4% ABOVE its year ago level, Over the past 12 months, 2,074k jobs have been created. In August, the job gains were in Professional & Business Services (+37k with the addition of 15.4k in Temp Help Services), Education & Health Services (+37k), Government (+34k), Financial Activities (+15k), Construction (+14k), Leisure & Hospitality (+12k), and Manufacturing (+3k). Jobs were shed in Retail Trade(-11k), and Other Services (-1k). The Unemployment Rate was UNCHANGED in August at 3.7%, compared with market expectations for a small decline to 3.6%. Household employment rose by 590k while the labor force increased by 571k, resulting in a decrease in the number of unemployed of 19k. The Labor Force Participation Rate ROSE by 0.2 percentage points to 63.2%. The Employment-Population Ratio ROSE by 0.2 percentage points to 60.9%. The number of people Working Part-Time for Economic Reasons ROSE by 417k to 4,295k. while Long-Term Unemployment ROSE by 77k to 1,243k (accounting for 20.6% of the unemployed), while the Mean Duration of Unemployment ROSE by 2.5 weeks to 22.1 weeks. There are now 6.0 million people officially unemployed. In addition, there are another 5,150k people who say they want a job but are not currently looking for one. Finally, another 4,295k people are working part-time because of slack economic conditions. The Index of Aggregate Hours FELL by 0.4%, combining the moderate gain in private payroll employment and the shorter workweek. Hourly Earnings ROSE by 0.4% in August, above market expectations of 0.2%. Hourly earnings are now 3.2% ABOVE their year ago level. Weekly Earnings also ROSE by 0.7%, the result of the change in hourly earnings and a longer workweek. Weekly earnings are now 2.9% ABOVE their year ago level. The Average Workweek ROSE by 0.1 to 34.4 hours, in line the market consensus at 34.4 hours.
Article by Contingent Macro Advisors