The US labor market continues to grow, but hiring slowed slightly in August, with employers adding 156,000 new jobs and the unemployment rate increasing slightly from 4.3 to 4.4 percent, according to the Labor Department’s monthly jobs report. The Associated Press examines the numbers:
Job growth in June and July was revised down by a combined 41,000, leaving an average monthly gain this year of a solid 176,000. Taken as a whole, Friday’s jobs report pointed to an economy that is still steadily generating jobs, though at a slower pace than it did earlier in the recovery from the recession. With fewer people looking for work, fewer jobs are being filled.
One persistent soft spot in the job market is that pay raises remain tepid. Average hourly pay rose just 2.5 percent over the 12 months that ended in August. Wage growth typically averages 3.5 percent to 4 percent annually when unemployment is this low. … Overall, hiring this year has averaged 176,000 a month, roughly in line with 2016’s average of 187,000. August was the 83rd straight month of job gains.
The report does not account for the economic impact of Hurricane Harvey, which came too late in the month to be reflected in the Labor Department’s surveys. Economists tell the AP the effects of the disaster will likely be visible in the months to come, with job growth first weakening and then rebounding as workers who were temporarily laid off are rehired.
Overall, August’s job numbers undershot economists’ expectations, CNBC’s Jeff Cox reports, but not enough to cause concern:
Economists surveyed by Reuters had been expecting payrolls to grow by 180,000 in August and the unemployment rate to hold steady at 4.3 percent. A broader measure that includes discouraged workers and those holding part-time jobs for economic reasons also was unchanged at 8.6 percent. Despite the miss on the headline number, markets reacted little to the news as stocks appeared headed for a higher open and government bond yields and the U.S. dollar edged lower.
“This report is all noise and no signal,” said Joe Bruselas, chief economist at RSM. “I’m going to advise our clients to ignore the top-line number and focus on the long-term trend. … We’re still adding roughly twice as many jobs as we need to keep the unemployment rate stable. This labor market is tight as a drum.”
Last month’s report gives few clues as to whether the Federal Reserve will change its policy trajectory in the coming months. The Wall Street Journal’s Nick Timiraos reads the tea leaves, noting that while the headline figures don’t give any reason to believe the Fed will reconsider its plans to raise interest rates again later this year, the report could add new fuel to the debate over how fast to raise rates “because, at the margins, the data give less reason to worry about the economy overheating.”
According to Nelson Schwartz at the New York Times, markets are now betting against a rate increase later this year, but that doesn’t mean it won’t happen:
“There’s no sign of inflation, which keeps the Federal Reserve on hold in terms of interest-rate hikes, and it suggests stocks should keep doing well,” [Torsten Slok, chief international economist at Deutsche Bank,] said.
Traders now assume a 30 percent chance of a rate increase when Fed policy makers meet in December, down from a 50 percent chance a few weeks ago. The Fed is set to meet later this month, but is not expected to raise rates. Like many economists, Mr. Slok does expect the Fed to move at the end of the year, even if market participants are betting otherwise.
On the surface, the new jobs report reflects broad confidence on the part of businesses that the economy will continue to expand, but Preeti Varathan at Quartz highlights a recent survey from the New York Fed that suggests working Americans are not as confident about the future as their employers appear to be:
According to the survey, the near-term outlook for the labor market is deteriorating. In the post-recession recovery, job seekers have steadily increased the lowest wage at which they’d accept a new job offer. And in the past six months or so, that number has fallen, on average, by almost $4,500. This indicates that workers are willing to sell their skills for less than they did two years ago. This couples with already stagnating wages and lower earnings.
All respondents, employed or otherwise, are asked their expectations about receiving one or more job offers. This measure is seasonal, peaking in the spring and summer. In November 2016, respondents felt they had, on average, a 25% likelihood of receiving at least one offer in the next four months. This year, confidence has fallen, even as American workers are quitting at higher rates.