WASHINGTON — The U.S. August employment report was nothing to crow about, giving mixed signals about the economy.
August payrolls printed up a lower-than-expected 96,000 but the unemployment rate fell 0.2-point to 8.1% (8.1115% unrounded). Earnings fell and hours rose, with mixed implications for incomes and production.
The decline in unemployment stemmed from a 368,000 contraction in the labor force and a 0.2-point drop in participation in the workforce to 63.5%. Caution is urged in interpreting this in the event education workers somehow took lump-sum payments and then declared themselves unemployed. Certainly the small growth in payrolls is not consistent with an ever-declining unemployment rate.
Average hourly earnings fell one cent to a 1% rise over the year (for private workers) and hours rose.
The June-July payrolls revision totaled a 41,000 decrease on net, not a sign of strength. And many of the August jobs gains were not in "strong" industries — centering in restaurant and home healthcare workers.
The August payroll composition included: manufacturing off 15,000 (auto down 7,500, on fewer recalls after fewer layoffs than usual), construction up 1,000, retail up 6,100, temporary workers down 4,900, healthcare rose 21,700, government fell 7,000 (state and local continued its drop and federal printed up 3,000), finance rose 7,000, restaurants gained 28,300, and utilities added 8,800 as a strike settled.
Bottom line: not a bad report but certainly no ball of fire that will alter the Fed's thinking. The U.S. economy needs to generate two or three times this many jobs each month to climb out of its malaise.
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