U.S. Employment increases by 142,000 jobs in August
KEY TAKEAWAY:According to the Bureau of Labor Statistics (BLS) recent report, employment in the U.S. increased in August 2024 by 142,000 which, combined with the previous four months of sub-par growth, establish that the labor market has entered a slowdown phase. The unemployment rate fell slightly to 4.2%.
Employment
In Brief: It appears the downturn in the labor market that we’ve been anticipating has been validated by today’s report. Over the past five months, ending in August, there was an average of 134,600 jobs added, compared to an average of 254,000 jobs added in the months prior. The Federal Reserve has already announced its intention to cut interest rates this year. These results might prompt the fed to adjust its schedule for rate cuts earlier than expected.
Diving in: In contrast to the weak job numbers, August’s other payroll results were not as flat. As a result of the recent CPI values, wages increased roughly 3.7% on an annual basis. Weekly hours rose at the same rate.
Unemployment
The Big Picture: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, edged up to 7.9% in August. The U-3 unemployment rate, which indicates only the number of unemployed people actively seeking a job, decreased to 4.2%.
What Does This Mean?: The mixed outcomes in the U-3 and U-6 unemployment rates signal that more people are avoiding unemployment by working part-time jobs. This is a bad outcome when it is accompanied by weak job growth, as it indicates that these part-time jobs are being filled by those previously employed full-time rather than those who were completely unemployed.
The employment numbers above reflect the seasonally adjusted, monthly change in non-farm jobs.
The unemployment rate measures the percentage of the labor force that is currently without a job. The national unemployment rate has remained steady throughout 2023 and now into 2024, fluctuating between 3.7% and 4.1%.
U-3 unemployment rate is the most commonly reported rate in the United States, representing the number of unemployed people actively seeking a job. The U-6 rate covers discouraged, underemployed, and unemployed workers in the country.
The labor force participation rate is an estimate of an economy’s active workforce. YTD the U.S. labor force participation rate ranged between a low of 62.5% and a high of 62.8%, according to the U.S. Bureau of Labor Statistics.
How We Matched Up
Geographic Solutions: Geographic Solutions' expectations of 135,000 jobs were close to the 142,000 jobs added in August. The unemployment rate expectation of 4.4% was above the 4.2% result.
The Wall Street Journal: The Wall Street Journal's expectation of 161,000 jobs being added to the labor market was above what was recorded in the labor market report. The unemployment rate forecast of 4.2% was on.
ADP: According to ADP’s latest estimate, the private sector added 99,000 jobs in August, compared to the 118,000 reported by the BLS.
Key Takeaway: While Private Education & Health Services added the highest number of jobs in August (47,000) it was once again far off its average job growth over the previous 12 months (76,000). The best performances compared to their recent histories were in Leisure & Hospitality (46,000) and Construction (34,000).
Why: In construction, heavy and civil engineering construction along with specialty contract construction accounted for most of the new jobs rather than building construction. Employment in food services and drinking places (restaurants and bars) sharply increased, making up two-thirds of all job creation in Leisure & Hospitality.
Stock Down: Information and Public Sector
Key Takeaway: The Manufacturing Sector was down this past month with 24,000 jobs lost. Private Education & Health Services employment disappointed with only 47,000 jobs for the month when its 12-month average was 76,000.
Why: Losses in the Information sector were widespread but most concentrated in Publishing. Local governments shed more than 16,000 non-education jobs.
Will job creation remain robust over the coming months?
Based on the numbers from the latest report, we anticipate employment growth will slow down but will continue to add jobs at a slower pace in the coming months. This indicates that businesses are still looking to expand but more gradually.
Do workers or employers have more power in the labor market?
Neither side has a definitive upper hand, but it appears that the decline in unfilled job openings is giving employers more influence in the job market.
How has the labor market shifted since March 2023?
The labor market has continued to add jobs without slowing down despite widespread expectations of a recession.
Geographic Solutions derives its employment forecast and unemployment rate forecast from internal data on the number of job openings, searchers, and employment and unemployment applications filed on Geographic Solutions' state client sites. The forecast uses unemployment claims data from the U.S. Department of Labor (USDOL).
Are you enjoying Phillip Sprehe’s insights and analysis? Interested in having him speak or provide content for podcast, television, internet, or other mediums? Please email us using this form.
.gif "Econ Corner Title Graphics - August 2024 (1)")
.gif "Econ Corner - August 2024 (1)")
.gif "Meet the Economist_Econ Corner (5)")
