August 2019 Employment Situation

One of the most-followed economic indicators disappointed in August 2019.  Employment gains decelerated to 130,000 according to the Bureau of Labor Statistics.  Adding to the weakness, the prior two months’ tallies were downwardly revised by 20,000 net new jobs.  However, we shouldn’t lose track of the fact that unemployment is very low; it held steady at 3.7 percent despite 507,000 new entrants added to the labor force.

Private payrolls led the figures higher, but they decelerated.  Firms added 96,000 net new jobs in the period, slowing from the downwardly revised count of 131,000 (originally 148,000).  Healthcare as well as professional and business firms added the most to the tally.  However, a couple of industries lost jobs in the period.  Mining and logging firms shrunk their payrolls for a third consecutive period as was the case for retail employers.

Other data within the release were positive.  The average workweek for all employees increased six minutes to 34.4 hours.  Additionally, average hourly earnings rose 11 cents to $28.11 after rising nine cents in July.  While six minutes and 11 cents don’t seem like much (about $6.58 a week to the average worker), when you multiply them by nearly 158 million workers, that’s just over an extra $1.0 billion earned a week within America’s economy based on these two small gains alone.

Employment has been one of the best performing indicators for years.  Despite its historic success, it is decelerating now.  Regular readers of Atlas’ notes know this is not the only economic indicator growing at a slower pace.   Arguably, our economy is within a window of vulnerability these days, making it more susceptible to exogenous shocks.  However, the current employment situation still reflects an underlying strength we’ve seen for some time now.