Employment grows by 201,000 in August; jobless rate stays at 3.9 percent
Friday, September 07, 2018
Nonfarm payroll jobs increased 201,100 in August vs. 157,000 in July, as the unemployment rate remained at 3.9 percent for the second straight month, the Bureau of Labor Statistics reported.
With a labor force of over 150 million, job gains occurred in professional and business services, healthcare, wholesale trade, transportation and warehousing, and mining. In August, the number of jobless workers, 6.2 million, was little changed.
For major groups of workers, unemployment rates showed scant movement between August and July.
A decline in the unemployment rate should hike workers’ hourly wages, as employers raise employees’ pay in light of decreasing number of job applicants. The BLS data, however, shows tepid growth in wage income.
"In August, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $27.16," the BLS reported. "Over the year, average hourly earnings have increased by 77 cents, or 2.9 percent."
Is the glass half-full or half empty? "Wage growth of 2.9 percent is more promising than what we’ve seen in recent months," according to a statement from the Economic Policy Institute in Washington, D.C., "but we should expect more from the economy for working people."
In August, the employment-to-population ratio (the share of the labor force now on payrolls vs. the total working-age population) was 60.3 percent vs. 60.5 percent in July. That data indicates that people are leaving the paid labor force, according to Heidi Shierholz, EPI’s director of policy, on Twitter.
Small business hiring declined in August. Firms of 1-49 employees hired 21,000 workers in August compared with 52,000 workers in July, according to the ADP National Employment Report. Companies of 50-499 workers hired 121,000 employees in August vs. 119,000 in July. Firms with 500 or more employees hired 31,000 workers in August compared to 48,000 in July.
According to ADP’s report, the service sector of the economy expanded by 177,000 jobs in July vs. 148,000 new hires in June. Health care/social assistance led the way with 49,000 jobs added in July. Education/health was next with 48,000 new hires and professional/business services with 47,000.
In the goods-producing sector, hiring grew by 24,000 jobs in August vs. 42,000 in July. Manufacturing firms hired 19,000 employees in August compared with 23,000 in July. Construction employment rose by 5,000 in August from 7,000 new hires in July.
ADP’s National Employment Report aggregates America’s nonfarm private sector employment from actual transactional payroll data, according to the ADP Research Institute that collaborates with Moody’s Analytics. ADP report’s differs is thus distinct from the BLS methodology of business and household surveys.
"Although we saw a small slowdown in job growth the market remains incredibly dynamic," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Midsized businesses continue to be the engine of growth, adding nearly 70 percent of all jobs this month, and remain resilient in the current economic climate."
"Employers are aggressively competing to hold onto their existing workers and to find new ones,": said Mark Zandi, chief economist of Moody’s Analytics. "Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions."
Two storm clouds are on the economic horizon. Trade disputes between the U.S. and China and Canada are fraught for employers and employees stateside.
The Federal Reserve Bank increasing interest rates will hike borrowing costs. That, in turn, will slow the lending and spending that are central to economic activity for U.S. businesses and households.
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