–Workweek Rebounds; No Additional Wage Acceleration; Labor Participation Back to February
By Denny Gulino
WASHINGTON (MaceNews) – The August jobs report Friday had some bright spots amid a somewhat subdued landscape, with the three-month average payrolls growth slowed to 156,000 even with a new and sizable injection of Census workers.
The brightest spot was the way the unemployment rate held at 3.7% for the third month while the overall payrolls growth of 130,000 was a disappointment for most forecasters who agreed on an anticipated number at least 30,000 higher. Newly hired Census workers accounted for 25,000 of the total, moving the focus to private payrolls, up just 96,000.
The report, the last reading of the labor market before the mid-month Federal Open Market Committee meeting, seemed unlikely to alter the views already expressed by committee members, both those seeing a significant slowdown threat and those who think that threat is not serious enough to trigger another rate cut.
Downward revisions for July and June also detracted from the overall picture. The June payrolls total is now 178,000, smaller by 15,000. July is now 159,000, 5,000 less.
This year’s monthly average for payrolls is 158,000, with the latest three months decelerating to 156,000, a clear slowdown from last year’s average of 223,000.
The labor participation rate, with its two tenths August increase, was good news only at first glance. That improvement took it only back to where it was in January and February, 62.3%. A decade ago it had been up to 65.7.
Average hourly wages in August stayed stuck at an over-the-year increase of 3.2%, having failed to accelerate this year beyond the moderate rate that shows very little promise of ever getting back to the 4% range before the financial crisis despite the tight labor market. Adjusted for inflation that increase is cut in half, at 1.6% through July. Further adjusted for the past year’s workweek shrinkage, annual average hourly earnings advanced only 0.8% through July, the most recent figure.
The average workweek increased by a tenth of an hour in August, with utilities adding 0.4 of an hour after having been the biggest drag on July’s results with its tenth decline. The factory workweek rose by 0.2 yet factory overtime contracted by a tenth of an hour in August.
Manufacturing payrolls rose just 3,000 in August, generally in line with several other indicators although not showing the contraction signaled in the latest ISM and Markit momentum data point estimated by purchasing managers. Construction was close to flat and retail declined by 11,000.
Health care gained 24,000 jobs, below the 32,000 average for the past year. Financial jobs were up 15,000, half in insurance, a total ahead of the 9,300 annual monthly average.
The core category for business development, the professional and business services segment, has maintained its energy better than most, increasing by 37,000 in August, above its monthly average for this year but 10,000 below the average for last year. Computer and management related jobs were heavy contributors.
Those employed showed a healthy 590,000 increase for the month while those unemployed stayed around 6 million.
Thursday’s initial jobless benefit claims numbers, more recent that those generated by the monthly jobs report snapshot, showed an increase to 217,000 for the latest week, the highest in only four weeks and suggesting layoffs have not begun to reflect any overall slowdown in economic activity. Wednesday’s Federal Reserve Beige Book survey of economic activity likewise contained no new danger signs although a pace of improvement that remained modest to moderate.