(Bloomberg) — The U.S. economy added fewer employees than expected in August, the jobless rate rose and wages climbed less than forecast, in a break from otherwise solid progress in the labor market.
Highlights of employment (August)
- Nonfarm payrolls rose 156k (est. 180k); June-July revisions subtracted 41k jobs
- Unemployment rate, derived from separate survey of households, rose to 4.4% (est. 4.3%)
- Average hourly earnings rose 0.1% m/m (est. 0.2% gain); up 2.5% y/y (est. 2.6%)
- Manufacturing was bright spot, adding 36,000 jobs, matching a five-year high
The report was less positive than others in recent months, with major components either little changed or below estimates. The private service-providing jobs that have driven hiring for most of the year showed a cooling in August, with gains of 95,000 at a five-month low. By comparison, manufacturing and construction were robust. Wage growth was held back by declines in hourly earnings in mining and manufacturing.
The data mark the seventh straight August that the government’s initial payrolls print has missed the median estimate of economists; the figure has been revised upward in five of the past six years. The trend may be explained in part by a seasonal adjustment process for the new school year.
The report may represent the cleanest reading on the labor market for several months, as Hurricane Harvey’s fallout in the Houston region begins to affect the data in coming weeks. While the storm may depress payrolls at first, jobs will probably get a subsequent boost as construction and utility workers help rebuild housing and infrastructure.
The Labor Department data are based on surveys that reflect payrolls and Americans’ work status for the week that includes the 12th of the month. Harvey made landfall on Aug. 25.
“This was a softer report, but it doesn’t change the overall picture, which is the economy and the labor market are in good shape,” said Gus Faucher, chief economist at PNC Financial Services Group Inc. in Pittsburgh. “August tends to be a little bit softer, so we can certainly see an upwards revision over the next couple of months,” and wage growth will accelerate as the labor market tightens, he said.
The payrolls figure is a “decent number, in line with a labor market that’s gradually maturing,” said Greg Daco, chief U.S. economist at Oxford Economics, who projected a 160,000 increase. “Demand for labor is still solid. Wage growth remains modest.”
- Participation rate, or share of working-age people in the labor force, unchanged at 62.9%
- The U-6, or underemployment rate, was 8.6% for a third month; figure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking
- Measure of those working part-time for economic reasons fell by 27,000 to 5.26 million
- Private employment increased by 165,000 (forecast was 172,000) after a 202,000 advance; government payrolls fell by 9,000
- Construction jobs rose by 28,000, the most since February; retail hiring was up 800, the first increase since January; leisure and hospitality was up 4,000 following a 58,000 gain
- Average workweek for all workers fell to 34.4 hours from 34.5 hours (forecast was 34.5 hours)