August Jobs Report Delivers Mediocre Numbers
A mostly mediocre jobs report for August.
The American jobs market seems to be be somewhat schizophrenic in 2016, and it’s unclear what that means when it comes to the state of the economy, how the Federal Reserve will act going forward, and what it all means for the 2016 election. We opened the year with a rather mediocre report for January that broke a pattern of seemingly decent jobs growth at the end of 2015. That was followed by a much better report for February and March that suggested that January was largely an anomaly. April and May, however, came along and it seemed as though the bottom had fallen out of the labor market for some reason thanks to two of the more disappointing reports of the entire economic recovery. Most recently, June and July returned to the previous trend of positive news with solid jobs reports for both months. Leading up to today’s release of the August Jobs Report, the question among analysts, the Federal Reserve, political observers, and others was whether we’d get a third month of positive news or return to something less ideal. As if on cue, we ended up with what can only be called a disappointing report that suggests the economy is not nearly as robust as some boosters would like it to be:
Total nonfarm payroll employment increased by 151,000 in August, and the unemployment rate remained at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several service-providing industries
The number of unemployed persons was essentially unchanged at 7.8 million in August, and the unemployment rate was 4.9 percent for the third month in a row. Both measures have shown little movement over the year, on net. (See table A-1.)
Among the major worker groups, the unemployment rates for adult men (4.5 percent), adult women (4.5 percent),teenagers (15.7 percent), Whites (4.4 percent), Blacks (8.1 percent), Asians (4.2percent), and Hispanics (5.6 percent) showed little change in August. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million in August. These individuals accounted for 26.1 percent of the unemployed. (See table A-12.)
Both the labor force participation rate, at 62.8 percent, and the employment-population ratio, at 59.7 percent, were unchanged in August. (See table A-1.)
(…)
Total nonfarm payroll employment rose by 151,000 in August, compared with an average monthly gain of 204,000 over the prior 12 months. Employment continued to trend up in several service-providing industries. (See table B-1.)
Employment in food services and drinking places continued to trend up over the month (+34,000). Over the year, the industry has added 312,000 jobs.
Social assistance added 22,000 jobs over the month, with most of the growth in individual and family services (+17,000).
In August, employment in professional and technical services edged up (+20,000), about in line with its average monthly gain over the prior 12 months (+24,000).
Financial activities employment continued on an upward trend in August (+15,000), with a gain in securities, commodity contracts, and investments (+6,000). Over the year, financial activities has added 167,000 jobs.
Health care employment continued to trend up in August (+14,000), but at a slower pace than the average monthly gain over the prior 12 months (+39,000). In August, hospitals added 11,000 jobs, and employment in ambulatory health care services trended up (+13,000). A job loss in nursing and residential care facilities (-9,000) offset a gain in July.
Employment in mining continued to trend down in August (-4,000). Since reaching a peak in September 2014, employment in mining has declined by 223,000, with losses concentrated in support activities for mining.
Employment in several other industries–including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, temporary help services, and government–changed little over the month.
The Bureau of Labor Statistics also reported that job growth in June was revised downward from +292,000 to +271,000 and that the numbers for July were revised upward from +255,000 to +27 5,000, for a net downward revision of -1,000. With these revisions and including the reported figures from August, job growth over the past three months has averaged +232,000 jobs per month, which represents an improvement over the previous three months. For the year as a whole some 1,452,000 jobs have been created since the start of the year, which averages out to 181,500 new jobs created since the start of the year, a respectable number I suppose but hardly one that is indicative of a strong, robust economy. A deeper dive into the report shows no significant changes in the long-term unemployment or labor force participation rates, and once again the top-line unemployment figure remained unchanged, which suggests that there is still more supply than demand when it comes to the jobs market at this point. At the same time the report showed another round of small upticks in average hourly wages and hours worked, but neither change is very large, which suggests that there isn’t much pressure on employers to raise wages for existing employees. All in all, this was a rather mediocre report that once again leads to real questions about where the economy is headed. The slower economic growth indicated by the Gross Domestic Product report would suggest that we’re likely stuck in this pattern for the time being, though.
As The New York Times notes, this report is yet another piece of evidence suggesting the Federal Reserve is likely to hold back on a rate increase:
Capping two consecutive months of hearty jobs gains, hiring eased in August, with the government reporting on Friday that employers expanded their payrolls by 151,000 workers. The temperate performance is expected to bolster those within the Federal Reserve who favor a wait-and-see approach toward raising the benchmark interest rate when the central bank meets later this month.
The official unemployment rate, based on a separate survey of households, remained at 4.9 percent. Average hourly earnings grew only 0.1 percent, bringing the 12-month increase in wages to 2.4 percent, modest though still ahead of inflation. Revisions to the job gains previously reported for June and July found 1,000 fewer positions. Over the last three months, job gains have averaged 232,000 a month, with 271,000 in June and 275,000 in July.
This report reflects only a single month of the labor market’s performance, but it offers the last major piece of economic news before the central bank’s scheduled gathering on Sept. 20 and 21.
The state of the job market and the overall economy are also likely to be a flash point when Hillary Clinton and Donald J. Trump meet in the first presidential debate a few days later.
How to handle a recovery that has delivered what Ken Esch, a partner at PricewaterhouseCoopers, an accounting and consulting network also known as PwC, labeled “steady, not spectacular growth” is a key issue between the two candidates.
Since the financial crisis, Fed policy makers have raised the interest rate range just once, last December, from its near-zero level. Betting that low rates encourage businesses to borrow and invest, Fed policy makers are now split between those who worry that reducing the economic stimulus by lifting rates would derail a fragile economy and those who fear that waiting could allow inflation to take hold.
The jobless rate has been halved in the last seven years and consumer spending remains strong, but wages have only recently begun a slow climb. In 2016, monthly job gains flip-flopped, plummeting to 24,000 in May and swelling to more than 10 times that number in June.
Average monthly totals so far this year have fallen below the rate in the previous two years. But economists say that it is natural for the jobs machine to slow as the unemployment rate shrinks. Other note that the number of new entrants into the labor force is also slowing.
Still, record numbers of workers remain out of the labor market altogether, widening the gap between the haves and the have-nots and depressing wage growth.
“A lot of people are still on the bench that could come into the labor market,” Mr. Esch said before the jobs report was released on Friday. “Until more people are participating, I don’t see the inflationary pressures, and our data says we don’t expect to see much over the next 12 months.”
A recent PwC survey of private companies found fewer than half of respondents planned to increase their head counts in the coming year, a decrease from the first quarter of 2016. Mr. Esch pointed out that “companies expect to increase wages less than 3 percent.”
Given reports like this and the recent GDP report, it seems unlikely that the Federal Reserve will raise rates at its upcoming meeting and, as I’ve noted before, historical precedent suggests that they are unlikely to raise rates prior to the election absent absolute necessity, which is not manifesting itself in either the economic data or the inflation reports. Instead, we’re likely looking at another possible modest increase in December like we got last year, but given the fact that this increase doesn’t appear to have had much of an impact at all it’s possible that the board will demur for a longer period of time. On the political side, a weak report like this is likely to play into Republican arguments that economic growth is not nearly as strong as it needs to be. As I have noted before, though, the Trump campaign has had the strange habit of failing to take note of any of the economic data that is being released even when it is arguably something that would be in support of the arguments they’re making, which is just another sign of how badly run that campaign actually is at this point. In any case, this report reinforces the argument that the current recovery continues to be weak, and may be getting weaker. Whether that means we’re in danger of tipping over into recession in the near future is another question, but it’s certainly something worth worrying about at this point.
Mediocre numbers? I’d say, in the context of the past 6 years, unspectacular but steady jobs and unemployment data. In 2009 the unemployment rate was just over 10%, today it is at just under 5%.
We all know about the desultory labor market participation rate, however one can make a case that the participation rate would be higher if not for the negative job growth in government employment since 2009.
Once again…no change in Public Sector jobs. You cannot have 1/3 of your economy stagnant, during a time of slack demand, and expect any kind of significant growth.
There are 200,000 fewer teachers now than before the Bush Contraction. And 1,000,000 more students. If you account for growth, the net shortage of teachers is way more than 200K.
And that’s just teachers.
http://www.calculatedriskblog.com/2014/10/public-and-private-sector-payroll-jobs.html
You want small Government…this is the economy you get.
Look through Doug’s history and you’ll see that whatever the numbers are, Doug finds something negative to put in the headline.
@al-Alameda:
This goalposts moving makes me crazy.
Besides, who’s to say why a person extracts themselves from the labor market? Maybe they retired? Maybe they have enough money and don’t want to trade time for money anymore? Maybe they have prioritized more important things in life than subservience to the local shopping mall? Everyone brings their own story, and only a fraction of those stories are “can’t find a job, gave up, Obama sucks”.
Anyone following the Space X explosion (literal)? Now it looks like Zuckenberg and Musk are getting into a tiff.
I think I’m going to root for injuries…..let’s face it. ROCKETS BLOW UP REGULARLY. Anyone who thinks that rockets, especially those in development, DON’T have this as a typical problem needs to have the histories of the (deep breath) US, USSR, Japanese, Chinese, Indian, etc. space programs slammed on his head.
But these two clowns think it’s the same as designing a computer. Idiots idiots idiots….
@grumpy realist: The thinking is still.focused on fueled rocket ignition that requires some sort of ignition.
The thinking needs to change to maybe an ion powered engine. Maybe even nuclear.
@Tyrell:
The thinking needs to change to unmanned missions. Life support is crazy expensive and adds very little value.
Of course that won’t help the future jobs numbers (for astronauts anyway).
@Tyrell: Ion thrusters don’t work that efficiently in atmosphere. Best for deep space missions. And jolly good luck trying to get anything involving nuclear explosions to be acceptable getting off Earth.
The best we can probably do now is the combination of a 1 km tall launch tower coupled with a space platform 20 miles up acting as the lower end of a space elevator. You could even put together space plane –> space platform–>space elevator.
We don’t have the technology for a full-scale space elevator, but we’re pretty close to the technology that could work from 20 miles up.
So why is Elon Musk farting around with Space X? It’s not the technology that we’re going to need in the future.
you don’t actually need an answer for that, do you?
I have no idea what the jobs numbers for september are going to be, but there’s going to be something bad about them, at least according to what the headline here will be.
So Doug dusts off his “mediocre job growth” template…
Here( via Twitter) is how real economists see it. Justin Wolfers, Professor @UMichEcon & @FordSchool | Contributing Columnist @NYTimes | Visiting Prof @USydneyEcon | Senior Fellow @BrookingsInst & @PIIE:
Betsey Stevenson, Former Member of the President’s Council of Economic Advisers and Chief Economist at Labor. Current academic economist at Michigan:
So two economists see 71 months of steady, but rarely spectacular, economic growth, as good: Doug, blogger and libertarian ideologue, sees this as “disappointing”. Should be easy to figure out who is the reliable narrator here.
This is key for the election. The narrative here is the economy is growing steadily over time, which is good for the Democrat who is promising more of the same. Trump can continue to rail that thanks to Obama, the USA is a hell hole, but that’s not a sustainable picture in the light of 4.9 per cent unemployment, a steadily growing economy, $2.00 a gallon gas, and essentially zero inflation.
@grumpy realist:
1) Rockets regularly blow up during launch. They don’t regularly blow up while they’re being fueled.
2) The rocket wasn’t on the pad for launch, it was on the pad for a static firing test. People are rightfully wondering why you would put the actual satellite on the rocket for an engine test.
@grumpy realist:
My guess here is that contrary to the dreamers who grew up on Heinlein novels, there won’t be large scale movement into space until space transportation becomes relatively cheap & reliable, which will only come about with some sort of space elevator technology.
I am glad that you think we can have the tech for the elements of a space elevator. I had predicted that we wouldn’t start building a space elevator until 2050 or later, since we don’t have as yet have materials strong enough to build it. Seems that we already have the ability to build from satellite distance to 20 miles up. That’s great. It would be great if we focused on THAT kind of technology, rather than on a manned mission to Mars.
@Stormy Dragon:
Huh. Sounds to me like private sector folks can screw up just as much as government folk, right wing propaganda notwithstanding.
@stonetools:
And to answer the question, the actual satellite was on the rocket during an engine test because it allowed SpaceX to cut time off their launch schedule and save money.
Facebook is pissed because, since the satellite wasn’t destroyed during a launch but during an engine test, their launch insurance probably isn’t going to cover the loss, so SpaceX did something that saved themselves money while pushing a huge risk onto their customer.
@Stormy Dragon: Oh boy, I’m going to need popcorn for THIS lawsuit…..
@stonetools: Well, carbon nanotubes aren’t going to do it (they’re too springy). It’s going to have to be either diamond threads or maybe Boron Nitride nanotubes (strength yet unknown) or something else we haven’t figured out yet. We could use already existing available (much cheaper) technology but then you have to deal with the taper.
The reason to put the landing spot 20 miles up is a) it gets rid of 99.9% of the weather-related problems (which allows not-quite-so-strong material), b) protection from idiots on the ground.
But between getting a decent base material and using the T-stop crack propagation frustration method, we find ourselves on the verge of possibility.
$2/gallon gas, 38475 straight months of improvement, deficit cut by 60%, record stock market, 4.9% unemployment…
If Romney had won, Doug’s headline would be
Romney Economy More Wonderful Than Even Mitt Predicted: Too Early to Consider Third Term?
@grumpy realist:
Yeah, I think they’ll figure out the engineering. The real problem is to figure out whether it will be economically worth it to build such a structure. Contrary to the expectations of SF fans, no one is going to build it because it’s ” cool” or “for science.”
I’d like to see some projections of how much it would cost to build and how cheap it will be to boost a pound to space via the elevator. Once we get an idea of those figures, then we’ll figure out whether it gets built, once the building materials issue is solved (IF it gets solved).
The whole Colonies in Space thing is a pipe dream. There’s just no reason to live there.
If you don’t believe me, look at our colonies in Antarctica, or our colonies under the sea. It’s 1,000 times cheaper to to go those places, and we don’t. Because there’s little point.
@Thor thormussen:
“I think there is a world market for maybe five computers.”
Thomas Watson, president of IBM, 1943
The four members of my family own a collective 2 desktop, 4 laptops, 4 iphones, 4 iPads – and that’s just what we still use, not counting the dozen or more dead ones.
@Thor thormussen:
Doug has become boringly predictable on his economic forecasts.
The problem for Doug is that he takes his economic guidance from the journalists over at Reason. org and they belong to the libertarian economic cult of Austrian economics.
According to Austrian economics:
1.financial crises such as 2008 cannot happen because financial markets are efficient
2. Keynesian policies to expand aggregate demand through fiscal stimulus cannot work, because aggregate demand cannot be expanded.
3. Expansionary monetary policy like QE cannot stimulate the economy and will lead inevitably to inflation.
The last 8 years have been tough for Austrian economists:
1. The financial crisis which they said couldn’t happen, er, happened( Alan Greenspan has conceded he was dead wrong about this)
2. The 2009 Keynesian fiscal stimulus did start an economic recovery, which is still ongoing.
3. The QE monetary expansion contributed to the recovery, without rekindling inflation, in direct contraction to the fundamentals of Austrian economic thought.
Faced with this, Austrian theorists and those under their influence like Doug, simply take refuge in denial. This explains the pattern of Doug’s posts.
1. If the employment figures are good, then he reminds us that the previous months’ figures are bad.
2. If the figures are bad, then he gives us “job numbers disappointing” template. The idea is to convey the impression that the economic isn’t really recovering.
3. He rarely mentions the 2008 financial crisis and when he does, compares to the routine post WW2 recessions
4. He never mentions that the recovery has been of unprecedented length (71 months, smashing the previous record of 48 months of uninterrupted growth).
5. He never mentions that the recovery has occurred in the virtual absence of inflation. ( According to the Austrians , hyperinflation should have set in by now).
I expect Doug to continue in this pattern , no longer how far unemployment falls or how long the recovery continues. Certainly he won’t consider that his libertarian economic theories are wrong.
@grumpy realist:
http://www.popularmechanics.com/science/energy/a22678/em-drive-cannae-cubesat-reactionless/
@Thor thormussen:
So far there is no economic reason for space colonies (Remember when Heinlein theorized that we would colonize the Moon in order to grow wheat for the teeming billions of Earth? Oh well,I’ve been told it was a good novel).
However, that doesn’t mean that we will NEVER find a good economic reason to colonize space.Hey, maybe we’ll find unobtainium on Mars or (more likely) we’ll find a way to make Solar Power Satellites work. Finding energy ( a cheap, non-carbon-producing source of energy) is going to be THE technological problem to solve in this century. Space could be part of the solution.
@stonetools:
I think people forget that the western hemisphere was ‘discovered’ by European adventurers looking for cities of gold and fountains of youth. Instead they found silver, tobacco, beaver, bison, sugar (rum) and chili peppers. Not what they were expecting. Look first, figure out the economics later.
“The narrative here….”
I suppose you have a point if your goal in life is to be a waiter, bartender or doctors office receptionist.
http://www.zerohedge.com/news/2016-09-02/2014-us-has-added-520000-waiters-and-bartenders-and-lost-13000-manufacturing-workers
Well, this jobs report did not make it on most of the main line news channels, buried under the latest Trump lunacy and “where’s Hillary ?”. Buried along with Turkey moving into Syria, German banks near collapse, Iran armaments, huge asteroid near miss, southeast hurricane, and Italy earthquake disaster.
The networks are just beside themselves with this obsession with these two politicians.*
*sources – Reuters, PBS, Newsweek, USA
@michael reynolds: actually the trips to the americas were profitable very quickly. terrible analogy for space.
space colonies are more like flying cars. keep waiting for them, you’ll be waiting a while longer.
hey just got here- everyone blaming bush still?!
that was facetious, i know y’all are- nearly 8 yrs later and our “economy” is still on life support but it’s never obama’s fault. and we need to import refugees/immigrants to perform menial tasks that Americans just won’t do….as it’s “beneath” them….what a country.
@bill:
It’s your party that thinks we need to Make America Great Again. The rest of us are doing quite well, thankyouverymuch
From the BLS. A shortage of government workers indeed.
http://hotair.com/archives/2016/09/03/ratio-government-manufacturing-workers-will-depress/
@bill:
two-plus points:
(1) Blaming Bush? Well, when Obama was inaugurated we were losing jobs at a rate of over 700,000 per month and unemployment was rocketing up to 10%, and the economomy had shed nearly 25% of it’s wealth – or, about $18 Trillion. I know you’d prefer to blame Obama for this but, it’s not happening.
(1a) You do realize that at no point following the Great Depression did people shift from blaming Hoover to blaming FDR for the economic catastrophe and slow recovery.
(2) Unemployment has dropped from 10% to 5%, and inflation remains a non-issue and THAT equals our economy is on life support … okey doke.