PeopleScout U.S. Jobs Report Analysis – August 2019

The Labor Department released its August jobs report which shows that U.S. employers added 130,000 jobs, lower than the 165,000 analysts expected. The unemployment rate remained at 3.7% — a near 50 year low. Year-over-year wage growth remained at 3.2%, well ahead of inflation.

The Numbers

130,000: The economy added 130,000 jobs in August

3.7%: The unemployment rate remained steady at 3.7%.

3.2%: Wages increased by 3.2% over the past year.

The Good

According to economists, August’s jobs report numbers are decent but not great. The New York Times reports that one of the highlights of the report is the increase in labor market participation, which grew from 63% to 63.2%. This indicates that the economy is strong enough to draw in people who have been sidelined. The number is even more positive among workers between 25- and 54-years old, the prime working ages. In that group, the percentage of people working or looking for work increased from 82% to 82.6%.

The Bad

While many of the details of the latest report are not necessarily bad, they’re not necessarily good either. The job gains fell short of analyst expectations, and according to the Wall Street Journal, 25,000 of the jobs created in August are temporary positions for the 2020 census. Private-sector employers added just 96,000 jobs. Job growth appears to be slowing.

The New York Times also reports that industries that involve making something – manufacturing, mining and construction – are experiencing the most significant slowdowns, and this could be an indication that the economy is slowing. However, economists say that this report demonstrates that fears of a recession are overblown.

The Unknown

The big question is whether slowing growth is a symptom of a larger problem in the U.S. economy. The New York Times reports that while some sectors of the economy are slowing more than others, industries like business and professional services and healthcare are growing just fine. This suggests that while exceptional job growth isn’t likely to continue forever, the economy is more stable than some have feared.

The Wall Street Journal tells a similar story, with one analyst suggesting that the labor market has peaked, but could stay stead for some time.

“Overall economic growth probably averaged 2% over the last 12 months,” wrote Wall Street Journal Chief Economics Commentator Greg Ip. “Given stable unemployment, that’s probably the U.S. economy’s long-run potential. Something will upset this equilibrium, but it’s hard to say what. For now, fiscal policy, trade war and interest rates seem to be mostly canceling each other out.”