Econ Corner Title Graphics - August 2024

U.S. employment is expected to increase by 135,000 jobs in August

KEY TAKEAWAY: Employment in the U.S. is expected to increase in August 2024 by 135,000 jobs while the unemployment rate is expected to rise to 4.4%. 
LABOR MARKET OVERVIEW (1)-1
Employment Forecast - August 2024
Econ Corner - August 2024

Employment 

  • Our Expectations: It appears the slowdown in the labor market may have begun earlier than had been reported. As it turns out, the labor market was weaker than reported for the year ending in March 2024 with the BLS posting a large jobs revision downward by 818,000. We expect this overall softening trend to continue with new jobs. Last month, U.S. financial markets reacted negatively to the weaker-than-expected jobs report, despite it boosting the likelihood of interest rate cuts in the next few months. A similar jobs report for August may produce the same reaction as investors take it as a sign that the overall economy is stalling.

  • Diving in: In addition to the weak job numbers, July’s payroll results were disappointing across the board. As a result of the recent CPI values, wages showed virtually no change. Moreover, weekly hours decline by 0.3%, which indicates a slack in labor demand beyond the headline numbers.

 

Unemployment Outlook 

  • Here's the Scoop: The U-6 unemployment rate, which includes discouraged, underemployed, and unemployed workers in the country, surged to 7.8% in July. The U-3 unemployment rate, which indicates only the number of unemployed people actively seeking a job, rose steeply to 4.3%.

  • What Does This Mean?: The rise in the U-3 and U-6 unemployment rates signal the labor market is weakening. While a rising labor force participation rate can be a good sign, when it is accompanied by such a strong increase in the U-6 unemployment rate, it suggests that many workers are settling for part-time jobs rather than finding full-time work.

Key Indicators 

  • What We're Watching: The factors determining the predicted job creation and unemployment rate are below. They include the number of monthly job openings, average job salaries, job searchers, and the number of unemployment claims applications. This data from Geographic Solutions' (GSI) during the August survey period shows the following:

August 2024 Econ Corner Key Indicator Graphic

Analyzing these figures helps to paint a clearer picture of what to expect from the upcoming labor market report. Based on the numbers we can expect to see a labor market in July keeping pace with previous months this year. 

 

Employment & Unemployment Forecast

Will the US labor market continue to grow in the coming months? If so, what’s causing this recent growth?

Yes. Although job growth will be slow, recent employment gains coupled with an uptick in labor force participation rate seem to be enough to maintain positive forward momentum.  

 

How will the surging labor market impact the Federal Reserve’s decision to cut interest rates?

The large job growth seen over the last year gives the Federal Reserve room to maintain or raise rates without pushing the economy into a recession.

Despite the recent growth of jobs, why is the labor market still tight?

The labor market may give the appearance of being tight to some, but here's why it's not.  Typically a tight labor market means that the unemployment rate maintains a low rate after a period of decline, job growth slows, and wage growth picks up. Recent growth in jobs contradicts that we're in a tight labor market.

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).

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