Job Gains Disappoint At +142K, U. Rate Ticks Down to 6.1%
- The August Payroll Employment Survey showed a weaker-than-expected gain of 142,000 jobs.
- The Unemployment Rate for August dipped slightly to 6.1 percent.
- Average Hourly Earnings increased by 0.2 percent in August and are up 2.1 percent over the last year.
In what looks like an aberration, U.S. payroll employment increased by only 142,000 in August, well below the consensus expectation of about 215,000. Total revisions for June and July were -28,000 jobs. Today’s weak report breaks the chain of six consecutive +200K months. The weak headline jobs number was dragged down by a strike at a New England grocery store chain, resulting in a loss of 17,000 jobs for the month. Also, the weak official count of net new jobs was out of line with the ADP Employment Report, which showed that 204,000 private sector jobs were added for the month. Throw in about 11K government jobs on top of the ADP private sector gain and you total up to the 215,000 expectation. Seasonal adjustment factors can also do odd things to employment numbers this time of year. Lately, there has been a tendency for the August jobs numbers to be revised up. Other U.S. economic data have been consistent with ongoing moderate-to-strong job gains. The August unemployment rate was little changed, ticking down to 6.1 percent. The average workweek was 34.5 hours for the sixth consecutive month. Average hourly earnings increased by 0.2 percent and were up 2.1 percent over the previous year. I expect to see more wage pressure in the coming months as regional and occupational unemployment rates tighten up. The take-away from today’s jobs report is that one soft month does not establish a new trend, especially when other data is stronger. We continue to expect the Federal Reserve to announce the end of new asset purchases at their October 28/29 meeting. We look for interest rate lift-off in June 2015.
Construction employment increased by 20,000 jobs in August. Manufacturing added zero jobs. This is out of line with the August ISM Manufacturing Index which shows a strong employment sub-index for August at 58.1. Wholesale trade employment was up 6,500. Retail trade employment fell by 8,400 jobs, impacted by the above mentioned strike. Transportation and warehousing was little changed, up 1,200 jobs for the month. Employment at utilities was up by 1,600 jobs. Financial services gained 7,000 jobs in August supported by gains at insurers. Professional and business services employment increased by 47,000 jobs. Education and healthcare added 37,000 jobs. Employment in leisure and hospitality industries increased by 15,000. The government sector added 8,000 jobs in August.
Market Reaction: U.S. equity markets opened with losses. The 10-Year T-bond yield is down to 2.43 percent. NYMEX crude is down to $94.19/barrel. Natural gas futures are down to $3.82/mmbtu.
For a PDF version of this Comerica Economic Alert click here: Employment 09-05-14.