Yikes. The August jobs report is less than stellar as the economy only added 130,000 jobs in the month.
To make matters worse, a lot of those jobs were temporary jobs for the 2020 census.
But one jobs report should not cause a freakout. Unemployment remains at 3.7% while reports from earlier this week showed consumer spending continues to climb.
In order to fully understand the U.S. job market one has to look at the economy of the world as a whole. Manufacturing has slowed down in China, Germany, Japan, South Korea, and the United Kingdom.
This has led to a global slowdown, which has affected the U.S. economy. The manufacturing sector remains weak as it only added 3,000 jobs in August.
However, other sectors grew so the slow manufacturing growth has not spread to other parts of the economy just yet. From The Wall Street Journal:
In August, employers added jobs in health care, finance and leisure and hospitality. Government payrolls grew by 34,000, receiving a boost from the hiring of temporary workers for the 2020 census.
Signs the labor market tightened emerged in Friday’s report.
The labor-force participation rate or the share of Americans working or seeking work, ticked up to 63.2% in August from 63% in July. The pickup in participation indicates employers are pulling in people from the sidelines to fuel the economy.
Meanwhile, average weekly hours ticked up in August to 34.4 after declining in July.
Weekly wages went up to 2.9%, up from 2.7% in July. Hourly wages dipped a little: 3.2% from 3.3%.
The 3.7% unemployment is good. Plus, unemployment among minorities continues to tick down. Unemployment for black women hit an all-time low at 4.4%.
But broad measure of unemployment went up after “an almost-19-year low in July.”
The participation of workers aged 16 and over provided a bright spot. The overall number hit the highest it’s been since 2008.
August saw 63.2% in the labor force, up from 63% in July. The employed number went up to 60.9% from 60.7% in July.
Mike Loewengart, vice president of E*Trade, told The Wall Street Journal that the report offers something for everyone:
“Unemployment remains consistent and hourly earnings ticked up, a move we haven’t seen in some time. And it’s below expectations and depressed enough to fuel the Fed’s drive to cut rates this month, so in some ways there is something to like for everyone,” Mr. Loewengart said.
Pantheon Macroeconomics chief economist Ian Shepherdson offered a bleaker view, saying the hiring slowdown is ominous for the economy:
“With surveys pointing unambiguously to much slower payroll growth over the next few months, the chance of a sustained rebound is slim,” he says in a note. “The trend is softening, as firms scale back hiring plans alongside capital spending, in the face of prolonged and deep uncertainty.”
Like I said earlier the consumer spending numbers helps to sort of negate a dull August jobs report. Consumers forget the power they have since we are a consumer-driven economy. Despite the slow wage growth people are still spending their money. From CNBC:
The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month after an unrevised 0.3% gain in June. Economists polled by Reuters had forecast consumer spending advancing 0.5% last month.
The report added to trade and inventory data in suggesting that while the economy was slowing, it was not losing altitude rapidly. A year-long trade war between Washington and China has spooked financial markets. The U.S. yield curve has inverted, stoking fears that the longest economic expansion in history was in danger of being interrupted by a recession.
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