August Jobs Report Disappoints as Unemployment Ticks Up

Posted September 02, 2017

Payroll employment rose a smaller-than-expected 156k in August with 41k worth of downward revisions to June and July gains combined.

The unemployment rate ticked up from 4.3 percent to a still-low 4.4 percent, the Labor Department said Friday.

The Labor Department also revised down earlier estimates for job growth in both June and July by a total of 41,000 jobs, suggesting that the labor market is not quite as strong as it appeared to be a month ago. Construction employment jumped by 28,000 jobs last month. What we're experiencing right now represents job growth that barely suffices to absorb new entrants to the USA labor market (recent graduates and other young people entering the work force for the first time). The unemployment rate was essentially unchanged at 4.4 percent; it had been at 4.3 percent. The labor force participation rate held at 62.9 percent, as 77,000 individuals entered the labor force.

Underemployment, which includes the unemployed, part-timers who would like more hours, and people who have stopped looking for work and are not counted as unemployed but say they would take a job if they could find a suitable one, is also falling fast. Before this report, the pace of hiring had averaged 184,000 a month this year.

Employers in the US added a less-than-expected 156,000 net new jobs.

Despite the slight increase the unemployment rate is not bad - it's at a level considered to be at or near full employment by many economists.

Mack's story underscores the broader rebound in the manufacturing sector, which lost more than two million jobs in the last recession, but has partly clawed back its way back since then. Professional and business services led the job gains, with 40,000. Average hourly earnings for all employees on private nonfarm payrolls rose by just 3 cents to $26.39, following a gain of 9 cents in July. A rise in wages is seen by economists as portending an uptick in inflation, which has disappointed this year.

More concerning to fed officials than slower job growth is likely to be the stalling out of wage growth year-to-date in 2017. Over the past 12 months, average hourly earnings have increased by 65c, or 2.5%.