August Jobs Report Disappoints
After several months of good news, the August Jobs Report was quite a disappointment.
The jobs market in 2014 has been the healthiest that we’ve seen it since the end of the Great Recession. From the beginning of the year through July, the economy averaged nearly 230,000 new jobs created per month, and job growth for May, June, and July seemed to be pointing toward a strong close to the summer as we head into the Fourth Quarter at the end of September. Granted, the numbers themselves are far from the robust number north of 300,000 new jobs per month that we ought to be seeing, but they were certainly better than what we’d seen for most of the time since the recession ended in 2009. Because of that, and thanks in no small part to a series of healthy economic reports in last month, most analysts expected that we’d see another strong report for August, with the average estimate from economists calling for roughly 225,000 new jobs created. Instead, we got a rather disappointing report, but it’s unclear if it’s the start of a new trend or just a statistical blip:
Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U.S. Bureau of Labor
Statistics reported today. Job gains occurred in professional and business services and in health care.
In August, both the unemployment rate (6.1 percent) and the number of unemployed persons (9.6 million) changed little. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively. (See table A-1.)
Among the major worker groups, the unemployment rates in August showed little or no change for adult men (5.7 percent), adult women (5.7 percent), teenagers (19.6 percent), whites (5.3 percent), blacks (11.4 percent), and Hispanics (7.5 percent). The jobless rate for Asians was 4.5 percent (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)
The number of long-term unemployed (those jobless for 27 weeks or more) declined by 192,000 to 3.0 million in August. These individuals accounted for 31.2 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.3 million. (See table A-12.)
The civilian labor force participation rate, at 62.8 percent, changed little in August and has been essentially unchanged since April. In August, the employment-population ratio was 59.0 percent for the third consecutive month but is up by 0.4 percentage point from a year earlier. (See table A-1.)
Total nonfarm payroll employment increased by 142,000 in August, compared with an average monthly gain of 212,000 over the prior 12 months. In August, job growth occurred in professional and business services and in health care. (See table B-1.)
Professional and business services added 47,000 jobs in August and has added 639,000 over the past year. In August, management of companies and enterprises gained 8,000 jobs. Employment continued to trend up over the month in administrative and support services (+23,000), architectural and engineering services (+3,000), and in management and technical consulting services (+3,000).
Employment in health care increased by 34,000 in August. Within the industry, offices of physicians and hospitals added 8,000 jobs and 7,000 jobs, respectively. Social assistance employment continued to trend up over the month (+9,000) and has expanded by 104,000 over the year.
Within leisure and hospitality, employment in food services and drinking places continued to trend up in August (+22,000) and is up by 289,000 over the year.
Construction employment continued to trend up in August (+20,000). This is in line with its average monthly job gain of 18,000 over the prior 12 months. In August, employment trended up in specialty trade contractors (+12,000) and construction of buildings (+7,000).
Manufacturing employment was unchanged in August, following an increase of 28,000 in July. Motor vehicles and parts lost 5,000 jobs in August, after adding 13,000 jobs in July. Auto manufacturers laid off fewer workers than usual for factory retooling in July, and fewer workers than usual were recalled in August. Elsewhere in manufacturing, there were job gains in August in computer and peripheral equipment (+3,000) and in nonmetallic mineral products (+3,000), and job losses in electronic instruments (-2,000).
In August, retail trade employment was little changed (-8,000). Food and beverage stores lost 17,000 jobs; this industry was impacted by employment disruptions at a grocery store chain in New England. Elsewhere in retail trade, automobile dealers added 5,000 jobs.
Employment in other major industries, including mining and logging, wholesale trade, transportation and warehousing, information, financial activities, and government, showed little change over the month.
In addition to these numbers, the BLS also revised the figures for the previous two months downward by 28,000 jobs, something that hasn’t been done for several months. June’s number was revised downward from 298,000 to 267,000, while July’s number was revised slightly upward from 209,000 to 212,000. The top line unemployment rate itself did go down slightly, as did the long term unemployment rate, but that appears to be pretty much just a statistical anamoly. There was no change in the labor force participation rate, which remains at historically low levels, and the numbers of people employed part-time rather than full-time did not change significantly. It was, in other words, a fairly disappointing number, but it’s unclear what that means:
Once again, the American economy has managed to frustrate the optimists.
After a series of positive economic reports in recent weeks, the Labor Department said Friday that hiring in August sank to its slowest pace since December, with employers adding 142,000 jobs last month.
The vast majority of economists had been looking for a gain of at least 200,000 in payrolls, coming off healthy indicators for durable goods orders, construction activity and manufacturing in July and August.
The unemployment rate did fall by 0.1 percentage point to 6.1 percent last month, but that was because more people dropped out of the work force rather than found jobs.
“It presents a reality check versus other data, which showed more significant economic momentum heading into the third quarter,” said Michael Gapen, senior United States economist at Barclays.
Although the rate of economic growth rebounded to 4.2 percent in the second quarter after a contraction early in the year, Mr. Gapen said the latest jobs data suggested the economy was settling into a more moderate pace of growth of around 2.5 percent for the remainder of 2014.
As a result, he said, the Federal Reserve is likely to stick to its plan to raise short-term interest rates beginning in the middle of 2015, rather than move that timetable up, as some on Wall Street have speculated recently.
For anyone looking for a shift in tone when Fed policy makers meet this month, “this throws cold water on that,” Mr. Gapen said.
Other economists speculated that the tepid data in August represented something of a timeout after six straight months of payroll gains of more than 200,000, the best run since before the recession.
“This looks like a breather, rather than a fundamental downshift,” said Omair Sharif, senior United States economist at RBS. The month of August has a tendency to disappoint, he added, noting that of the last 10 August jobs reports, seven had come in below expectations.\
Given that, it would probably be best to wait for another month or two before declaring the trend that we’ve seen for most of 2014 at an end. We could see a revision for August that boosts numbers significantly, for example, or reports in September and October that put us back on the trend that we had seen for most of the year. That being said, it is somewhat disconcerting that this report seems to put us back into the same trend that we had seen for most of the past two years which, while better than nothing, certainly can’t be said to have been overly positively. Indeed, even at the 200,000 per month number we’ve been seeing for most of the year, it would still take another two years to completely erase the job losses from a recession that has been over for five years now, which at the very least underscores just how weak this recovery has been, and just how vulnerable we are to being pushed back into a recession under the right circumstances.
Another concern is the fact that we may never actually recover from the losses that we suffered during the recession and the long, slow recovery. Many of the people that lost their jobs during this period seem to have simply given up looking for work altogether, a fact that is demonstrated most starkly in the fact that the Labor Force Participation Rate remains at rates that we last saw during the recessions of the late 1970s and early 1980s. To some extent, this drop off can be attributed to the fact that Baby Boomers are retiring, but that simply cannot account for all of the people who have given up looking for work and, as this chart that Ben Casselman shared on Twitter this morning shows, August was the 49th month of the past 50 in which the number of people who dropped out of the labor force exceeded the number looking for work:
In this kind of environment, I have to wonder if we can really say there is such a thing as a “good” jobs report when there are more people dropping out of the labor force finding a job.
That’s obamacare working its magic. wait until tax season next year.
About as expected, actually.
Oh… and should we point out that the vast majority of jobs generated are part time jobs?
Have they given up the use of the word “unexpected” in their description of economic downturn? Are they finally admitting that downturn is the norm with this administration?
Maybe next summer will be the “summer of recovery.”
You do realize that there was positive job growth, right?
You also realize that in the 2008-09 recession, we were LOSING jobs at a rate of over 700,000 per month? You might also remember that the Great Recession of 2008 caused the loss of approximately 25% (or $17 Trillion) of the wealth of American households and businesses?
What is it that you have against positive and steady jobs growth since 2009?
Most likely, it will be get adjusted up. But Doug and the rest of the right wing crowd won’t acknowledge that, of course.
Justin Wolfers :
Ben Casselman gives a balanced view, IMO:
What’s truly depressing is that most economists understand that a second round of stimulus would pump up employment, but the Republicans would block any such action-and the public blames the the President for not doing something about unemployment. But let me not repeat my rant about the undersized stimulus in 2009 and Republican seconomic sabotage.
Hey wingnuts, this tweet’s for you:
Wingnut talking points: SOOOOOOOO predictable and easy to refute.
@stonetools: I don’t mind the fact that wingnuts won’t listen to facts about the economy – they never have and probably never will. What is bothersome is the absolute glee they take in what they think is bad news. Who cheers and considers it a victory when employment is down and the economy is tanking? What kind of person does that?
Doug has consistently posted articles when revisions–whether upward or downward–have occurred.
Losing 700,000/mo is using selective trough data in the favorite mold of charlatans and the ignorant. If he could stop 700,000/mo losses he could surely give us half as much in gains years down the road. What? he’s just teasing us until his last year in office? And the thing people have against positive job growth is that the incomes associated with them matter, not just the body count. You could decree that people work half the hours – and of course half the pay – and rejoice at the number of jobs or employed………but we are no better off.
As for Cassellman. He gives some relatively hard statistics and notes a bleak picture. He then speculates about positive notes (as people have for 5 years now) and concludes the best. This has been the pattern for 4-5 years now. Lucy is getting tired from pulling away that football.
Just this morning I read that black unemployment had grown to twice the overall rate under the Obama Administration, and almost all the wage gains had gone to the top few percent of income earners. Just the facts. What does Obama have against the Average Joe and blacks, and why do they support him given the terrible lot he has delivered to them?
You guys can blather all you want but economic performance is well, well below potential.
That (700,000 per month job losses) is not a selective data – that was our reality following the worst financial collapse since the Great Depression.
Conservatives act as if the 2008-09 recession was just another typical recession after which you guys would get back to eating Twinkies and consuming 24 packs of Bud Lite. Well it wasn’t like that at all. Again, a loss of $17 Trillion in the wealth of Americans – that is not something that is easily overcome.
Economic growth has been slow and steady, and among the advanced countries of the world we, because we avoided the conservative-preferred austerity policies, have avoided negative growth and another recession.
“The top executive for H&R Block, the nation’s largest tax preparer, on Wednesday said he expected President Obama’s health care law to add “significant complexity” to next year’s tax season.”
obamacare-is-dampening-the-job-market-in-3-principal-ways WHAT REALLY? @OTB Obama lap dogs….you know who you are… 😉
Last month, the Federal Reserve Bank of New York published two surveys of regional employers—one focused on manufacturing businesses, one on service companies—and asked them how Obamacare was affecting their businesses. For 2015, 33.3 percent of service firms said Obamacare was increasing their costs “a lot,” whereas 51.2 percent of manufacturing firms said the same. While almost no firms said they would be dropping health coverage for their workers, 16.9 percent of service firms and 21.6 percent of manufacturers said they would be reducing their workforce due to Obamacare. 21.8 and 20.5 percent, respectively, said they would be reducing wage and salary compensation. 25 and 36.4 percent, respectively, said they would be raising prices for their customers.
@MUCHBOXGRAD: How shocking. An executive for a company that does tax returns is telling people scary stories about how hard it’s going to be to do your taxes next year? If only you could hire someone to do them for you….
Please provide an example of an economy similar to ours that generated significant growth while simultaneously slashing the size of the Public Sector.
Same question to you, Drew.
Please provide an example of an economy similar to ours that generated significant growth while simultaneously slashing the size of the Public Sector.
Either way Taxes are going up next year and it going to be a nightmare to file. Probably going to get a nice increase too in your accountants’ bill for his extra time… Thanks Obama care .
big losses in employer based heath care coming too. Do you have a job? did you like you heath insurance there? oh good because you will be on Obama care next year too.
I’m not posting this for you(your mind, such as it is, is closed) but for the lurkers. Here is Ben Bernanke, an economist who is an expert on the Great Depression and head of the Federal Reserve Bank during the Great Recession:
Now if you were sensible, you would take instruction from someone who is in every way more expert than you, but I’m sure you’ll stick your fingers in your ears and yell, “NA NA NA”, because that’s what conservatives do.
While Bernanke did a great job of managing the gigantic financial crisis of 2008, he could have done even better had law makers responded with more fiscal stimulus. However conservatives, clinging to their outmoded mythology, refused:
That dates from 2010. Its now 2014.
So if you want to blame anyone for the sluggish recovery, blame the Republicans for thei irresponsible, sociopathic obsructionism. They’re the guilty parties.
See this analysis:
@stonetools: Your link didn’t work for me. But the passage itself seems to be about ADP’s accuracy, not about BLS’s revisions. I don’t know if BLS tends to revise their numbers in the direction of other forecasts. That’d be interesting.
That’s just nonsense.
YR Federal Outlays
2012 3,537,127m (-65,932m) (-1.8%)
2013 3,454,605m (-82,522m) (-2.3%)
2014 estimate 3,650,526 (+195,921m) (+5.7%)
The topic is employment…jobs.
We have lost around 2 million Public Sector jobs on net since the Bush Economic Death Spiral began. That’s a lot of demand that isn’t there…thanks primarily to failed Republican economic theories.
@Pinky: I should have noted that, from what I can find at least, state and local government spending have been level during these years, and since they’re together roughly equal to federal spending, those percentages should be cut in half. Not really seeing slashing.
But if you insist on looking at outlays you need to look at spending as a percent of GDP…which is dropping rapidly.
Oh yeah, since Doug no longer posts on Obamacare because the news has been so good, more good news:
I wonder how long before the Obamacare haters finally admit they were wrong and give up on their misbegotten crusade to deny millions of Americans health insurance?
Pretty sure that a generation from now, students are going to wonder whether the anti-Obamacare campaign was driven by stupidity, insanity or just sheer spite. The anti-Obamacare haters will sound just as wacky as this anti-Medicare prophet:
Why not look at spending? Isn’t the whole premise that government spending stimulates the economy?
Well…the post is about jobs.
But again…if you insist on looking at spending then you have to look at spending in relation to GDP. Just dollars spent is a meaningless metric without context.
Are your figures indexed for inflation? If not, they show a nominal growth of 1.3% total over 3 years (or about .4% per year), when inflation grew by far more than that over the same time period.
Mark Thoma has a nice primer and the conection between spending and employment here.
RTWT. It’s very accessible. BTW, its not as if this is up for debate. The overwhelming consensus among economists is that the economy benefitted from fiscal stimulus in 2009.
Certainly, too as I posted above the Fed certainly favored more stimulus, as did most economists.
@Moosebreath: I was looking at OPM data, unadjusted. Adjusting for inflation, the numbers come out to -1.2% per year. Again, not what I’d call slashing.
Well no…not when you look at dollars relative to……….nothing.
Nice to know that we can always rely on people to blame any bad economic news on Republican austerity and credit any good news to Obama’s leadership.
Don’t worry, that will change the next time a Republican is elected president. The interesting thing is, it will be true in that case too.
Well Republicans have worked hard to hold back the economy…shouldn’t they be given credit for their success?
@Pinky: Because it is significantly below a reasonable rolling average, and last month wasn’t actually special in any way, duderino
Didn’t you notice Doug’s OTB articles each month about how great the economy is doing during the past few months when the jobs reports did not “disappoint”?
I certainly hope so. The crappy HSA-focused catastrophic coverage plan I have from my employer today certainly leaves a lot to be desired – although the right loves it because it’s the epitome of free-market healthcare.
@Tony W: Correction: After a quick search I realize I was wrong and Doug is very fair on this subject. My apologies.
well he better do something, maybe he could blow off giving illegals amnesty until after the mid-term elections? oh, just did it….
@al-Ameda: Positive Job growth, but only in part time jobs.
And lets remember, please the lowest job participation rate since the Carter disaster. Same policies, same result. Not that hard a connection, Rick.
@Pinky: Exactly. Theyd rather you didn’t mention that man behind the curtain.
@Eric Florack: “same policies, same result” LOL
Bush left us with the economy shedding jobs at a rate of 700,000 per month, so, no, Obama has not implemented policies that have caused the loss of jobs nor a second recession. Just saying that Obama is Carter is NOT the same as it ACTUALLY being true.
@al-Ameda: nah, but thats the truth of it.
now do a bit of comparison between these policies and what Carter stagnated us with.
I did a comparison: George W. Bush stagnated us with the worst financial catastrophe since the Great Depression, millions of jobs lost, about 25% of the wealth of Americans ($17 trillion) vaporized in the 2008 crash.
Obama compares to Carter in no manner:
High Inflation? No.
High Unemployment? No.
High Interest Rates? No.
What else is there? As much as Republicans are desperate to make the Obama:Carter nexus, wishing it so does not make it so.
@al-Ameda: Not to pile on (but WTF) but W’s policies are credited for crush/kill/destroying three very good ventures that should have flourished but that wasnt enough, his (mis/mal)feasance wasn’t satisfied until it vanished $250K of equity in my home (on paper).
A nice Bronx cheer in his general direction is always appropriate.
@al-Ameda: Ill ask you, as well.
what ARE you smoking?
I mean, being attacked by islamo-facists had nothing to do with it, eh?
Its all Bush’s fault.
Look, Im no Bush fan but dont you think in your zeal to protect the leftist holy names, youve gone a little overboard, here?
@Eric Florack: @al-Ameda: Ill ask you, as well.
what ARE you smoking?
I’m a non-smoker, but thanks for asking.
It’s pretty tough to blame Obama for both (1) the loss of $17 Trillion in wealth and (2) the loss of millions of jobs, both of which were happening before he was inaugurated. I’m not protecting Obama, I’m pointing out what actually happened.
Finally, what did the attack of September 11th have to do with any direct threat to our security that emanated from Iraq? Apparently nothing. No one blames Bush for wanting to retaliate against the forces that attacked us, however it is entirely justifiable to ask what the nexus was between Iraq/Hussein, the attack of 9/11, and our decision to destabilize the balance of power in the region by going to war in Iraq.
It’s worth noting that the economy was in the toilet long before Carter took office.
Bush had bi-partisan (look it up dude, it means something) support for the war in Afghanistan. I voted for Bush in 2000. His disastrous decision to go to war in Iraq made a Democrat out of me. Iraq had nothing, repeat nothing to do with 9.11, fever swamp fantasies to the contrary.
Iraq most certainly had something to do with the greater cause of having a free middle east. Terrorists were given safe haven there. Saddam wrote check s for suicide bombers. He shipped its chemical weapons off to Syria…obama invades/ leads from behind in Libya under the guise that there was some kinda of genocide on the horizon…but when there is actually genocide happing because he withdrew our troops he does nothing ” we don’t have a strategy”. The strategy with Iraq was to go in weed out the bad actors and assert our sphere of influence for the greater good. But since the king of the golf course has a different opinion of what boils down to good vs evil he opted for the latter. Iraq was a strategic move to keep the Islamists in check….squandered by hussein obama.
Your ODS has no boundaries.
The greater cause of a free Middle East? Of course. Removing Saddam resulted in ceding power in the region to Iran, which has been a strong supporter of Syrian based terror, and has facilitated the rise of ISIS.
So you agree that the War in Iraq served to cede power in the region to Iran and in fact enables ISIS to become the threat it is today.
You are referring to the withdrawal agreement that President Bush signed off on, prior to Obama’s inauguration, of course. And the same agreement that Al-Maliki insisted on when he declined our offers to retain a presence. You see how that works?
There is no doubt, the 2003 War in Iraq was
the biggest foreign policy failure since the War in Vietnam.
The war in Iraq was a failure because it was ill-conceived, it had nothing to do with the attacks of September 11th, and it had the effect and end result of ceding power in the region to Iran, and created the conditions for ISIS to flourish. Feel free to blame Obama, those of us who are reality-based know otherwise.
Cheney, Rice, Rumsfeld and Bush sold the war based on a direct threat to America that could be a nuclear attack, which, immediately following 9/11 resonated strongly with Americans – it was the basis of the WMD pretext, which actual inspections showed to be false.
President Bush negotiated the leave agreement, Obama carried out the agreement, and al-Maliki declined Obama’s offer of further American presence.
Again, if Bush had not gone to war in Iraq we would not be discussing what to do vis.a.vis ISIS, Syria and Iran. The 2003 war was and is a foreign policy failure.
Almost a Poe, but you took it a bit too far.
YouTube Video? I have no idea what you’re referring to.
All of the chaos that you described is essentially the result of the disastrous decision to go to War in Iraq in 2003 – it’s that simple.
Iraq did NOT want us to remain there, we withdrew as the Bush Administration agreed to, and as the public wanted. Do you believe that a Republican Congress would have approved of invalidating that agreement, overriding the wishes of al-Maliki? Sure, of course.
Are you saying that Obama should have abrogated that agreement and kept troops in Iraq?