PeopleScout U.S. Jobs Report Analysis — August 2018

U.S. Jobs Report Analysis — August 2018

The Labor Department released its August jobs report which shows 201,000 jobs added to the U.S. economy. U.S. employers have added to payrolls for 95 straight months, extending the longest continuous jobs expansion on record. The unemployment rate remained steady at 3.9 percent.

The Numbers

201,000: The economy added 201,000 jobs in August.
3.9%: The unemployment remained at 3.9 percent.
2.9%: Wages increased 2.9 percent over the last year.

The Good

The 201,000 jobs added in August modestly beat analyst expectations. Average hourly earnings for all private-sector workers increased 10 cents last month to $27.16, a 2.9 percent increase from last August. This increase is the strongest year-over-year rise in earnings since the current expansion began in 2009. Over the past six months, 781,000 part-time workers have moved to full-time jobs.
Professional and business services added 53,000 jobs in August and 519,000 jobs over the year. The healthcare sector also had robust job gains with an addition of 33,000 positions in August and 301,000 since August 2017.

The Bad

The reason that the unemployment rate remained unchanged despite the job gains is that the labor participation rate dropped .02 percentage points from the previous month. This may indicate that there are limits for the tight job market to lure back those who have stayed out of the workforce.
While the loss of 3,000 manufacturing jobs in August may not be significant, most of these losses were in trade-affected industries like automobiles and transportation equipment. Without a resolution to the current trade disputes, the employment outlook in key manufacturing sectors is unclear and may have negative ripple effects in the nation’s industrial heartland.

The Unknown

It is not certain whether the decrease in the labor force will become a trend in the coming months. In 2008, more than 66 percent of adults were in the labor force which decreased to 62.7 percent in early 2015. This is the same level it fell to in August. A major factor is demographic change, with baby boomers hitting retirement age. It is uncertain whether a potential shortfall in workers can be addressed through immigration and automation.

Post by David Barol