August employment report brings mixed blessings for the U.S. economy.
U.S. employers added a robust 162,000 jobs in August, signaling an employment rebound, even as finance-sector jobs declined, according to the Bureau of Labor Statistics’ latest Employment Situation Summary.
The sectors with the most job growth were leisure/hospitality (62,000 jobs), government (35,000 jobs), private education/health services (29,000 jobs), and construction (22,000 jobs).
In contrast, the financial and insurance sectors lost 7,400 jobs compared to July. The hardest-hit sectors were insurance carriers and related activities (-6,300) and credit intermediation and related activities (-3,400). Securities, commodity contracts, funds, trusts, and other financial vehicles, investments, and related activities was one of two sub-sectors to add jobs (2,200). The other was the monetary authority/central bank, which added 100 new jobs.
Unemployment continues to edge down slightly, remaining at 4.1%, according to the summary.
By historic standards, the low jobless rate has the Federal Reserve pivoting its focus from maximum employment to price stability, said Federal Reserve Chairman Kevin Warsh during his keynote speech at the Jackson Hole Symposium at the end of August.
“There should be no misunderstanding: The Fed’s price-stability objective of 2%, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target,” he added.
Private Data Lags BLS
Using their own methodologies, the authors of ADP’s August National Employment Report and Bank of America’s Institute’s August employment report found similar trends, though to a lesser extent.
“The data can be noisy, partly due to seasonal variation and differences in pay-period timing, but in our view, this suggests labor market momentum may have ebbed a little,” wrote the authors of a Bank of America Institute report released Thursday. “Still, the overall picture from the Bank of America jobs estimate is one of a relatively healthy labor market. This is also the case in Bank of America data on unemployment payments into customer accounts, which showed very little [year-over-year] change in August.”
Using anonymized customer data, the Bank of America Institute estimated that August’s YoY payroll growth fell 3 basis points to 1.5% from the previous month.
Likewise, the ADP authors reported that private-sector employees added 38,000 jobs in August, the slowest pace of job creation since January. The education and health services sector added 45,000 jobs. Other growth sectors include leisure and hospitality (16,000) and construction (12,000).
However, its findings diverge from BLS estimates in a few sectors. The ADP authors were optimistic about financial activities, reporting that the sector added 6,000 jobs. They also estimated that manufacturing and business and professional services shed 17,000 and 4,000 employees, respectively.
Companies with more than 500 employees added the most new positions in August (34,000), followed by companies with fewer than 20 employees (20,000). Small companies (20-49 employees) lost 17,000 jobs. Mid-sized companies’ hiring picture was mixed. Those with 50-249 employees hired 2,000 people, while those with 249-499 employees let 2,000 go.
Although payroll growth is up, it offers little comfort to Wall Street because the financial sector remains under pressure.
