August Employment…Keeps US Guessing

by Tom Cooley and Peter Rupert

The Bureau of Labor Statistics establishment survey for August revealed a somewhat expected, yet somewhat disappointing, 173,000 employment increase. Upward revisions totaling 44,000 over the past couple of months took some of the edge off of the disappointment. Private employment posted only a 140,000 gain, however, and government continued to climb, up 33,000. Goods producing declined by 24,000, with manufacturing down 17,000 and mining and logging down 10,000. Given the tendency for the August numbers to be revised upwards this report is in keeping with previous months and is not likely a sign of weakness in the economy.

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Hours and Wages:

The average workweek ticked up to 34.6 after three consecutive months at 34.5. Average hourly earnings were also up slightly.

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Participation:

From the household survey, the number of unemployed fell by 237,000; however, the labor force was also down, 41,000, leading to a decline in the unemployment rate to 5.1% and no change in the labor force participation rate at 62.6. This is really the major conundrum for the U.S. economy. Labor force participation is at a forty year low. The employment to population ratio has picked up slightly but not anywhere near enough to reverse the precipitous drop during the Great Recession.  The low participation rates suggest there are many workers who have been effectively disenfranchised by the Great Recession which continues to cast its long shadow over the economy.  But these are now structural issues not cyclical ones.

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The number of people unemployed less than 5 weeks fell by 393,000 while the number unemployed 27 weeks or more rose 7,000; again showing that the issues seem more structural than cyclical.

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