US payrolls add 1.4 million jobs; unemployment rate drops to 8.4%
Friday, September 04, 2020
Employers added 1.4 million nonfarm new hires in August, down from the creation of 1.8 million jobs in July, according to the federal Bureau of Labor Statistics. August’s rate of unemployment fell to 8.4% from July’s 10.2%. Driving such improvements were economic reopening and Census 2020 hiring.
The number of unemployed workers dropped to 13.6 million in August versus 16.3 million in July. Most major worker groups saw their unemployment rates decline. “Both measures have declined for 4 consecutive months but are higher than in February,” according to the BLS, “by 4.9 percentage points and 7.8 million, respectively.”
The number of unemployed workers on temporary layoff dropped to 6.2 million in August compared with July’s 9.2 million, according to the BLS. August’s total of permanent job losers rose 534,000 to 3.4 million, up 2.1 million since February.
Wage income climbed last month. “In August, average hourly earnings for all employees on private nonfarm payrolls rose by 11 cents to $29.47,” according to the BLS. “Average hourly earnings of private-sector production and nonsupervisory employees increased by 18 cents to $24.81, following a decrease of 10 cents in the prior month.”
The average workweek for all employees on private nonfarm payrolls inched up by 0.1 of an hour to 34.6 in August versus July.
Big employers with 500 workers or more hired 298,000 employees in August, more than double July’s 129,000, according to ADP/Moody’s monthly employment report for nonfarm private-sector payrolls only. Midsize firms of 50-499 workers hired 79,000 employees in August after shedding 25,000 jobs in July. Small firms of 1-49 workers hired 52,000 employees in August after creating 63,000 jobs in July.
The service sector gained 389,000 new jobs in August versus 66,000 in July. Goods-making firms added 40,000 workers in August, up sharply from 1,000 new hires in July. Franchise businesses hired 21,500 new workers, a small bump up versus July’s 21,200.
On Aug. 27, the Federal Open Market Committee OK’d updates to its long-run monetary policy. The FOMC now stresses that maximum job creation is a “broad-based and inclusive goal” to be “informed by its assessments of the shortfalls of employment from its maximum level" versus past "deviations from its maximum level," according to a statement. In sum, the FOMC is boosting its emphasis on increasing employment.
The policy change arrives amid COVID-19-related job losses. "The economy is always evolving, and the FOMC's strategy for achieving its goals must adapt to meet the new challenges that arise," said Federal Reserve Chair Jerome H. Powell.
The change in central bank policy can offset the blow to consumer demand from the GOP-run Senate letting the across-the-board $600 hike in weekly unemployment insurance benefits end at the close of July. Meanwhile, an estimated 12 million workers and family members have lost their employer-paid health insurance from the COVID-19 pandemic since February, according to Heidi Shierholz, a senior economist and director of policy with the Economic Policy Institute in Washington, D.C.
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