U.S. Labor Market
Still on Track
The U.S. Labor
Market Report covering the national employment situation in August showed a
gain of 173,000 nonfarm jobs. The unemployment rate fell to 5.1% and the
average hourly wage rose by eight cents to $25.09. Over the year, average
hourly earnings were up by 2.2%.
The
employer payroll survey reported that total nonfarm employment in the United
States increased by 173,000 jobs in August. This was somewhat below
expectations, but does not signify a departure from the overall trend of strong
employment growth. The private sector contributed 143,000 jobs to the August
increase while the public sector added 30,000. Softening the blow of last month’s lower job count were upward
revisions to the June and July figures that showed an additional 44,000 jobs added
than previously reported. Over the past
three months, job gains have averaged 221,000 per month.
On
a year-to-year (YTY) basis, U.S. employment expanded by 2.92 million jobs, an
increase of 2.1%. Every major industry sector added jobs over the year with the
exception of mining and logging. This sector includes the oil and gas
extraction industries, which have been negatively affected by low energy
prices. However, employment declines were also recorded in other types of
mining, particularly coal and support activities related to the mining sector. Overall,
employment in mining and logging declined by 8.9% or 80,000 jobs over the year.
The
fastest growing private sectors in YTY percentage terms were professional and
technical services (3.6%, or 303,000 jobs); construction (3.6%, 219,000 jobs);
administrative and waste services (3.3%, 284,4000 jobs); health care services
(3.1%, 564,100 jobs); and growing at a rate 3.0% each, leisure and hospitality
(439,000 jobs) and transportation and warehousing (140,900 jobs).
New
record high levels of employment were reached last month in the following
super-sectors: trade, transportation and utilities; professional and business
services; education and health; leisure and hospitality; and other services
(these are mainly jobs in repair and maintenance, personal and laundry services,
and membership organizations).
In
addition to the employer payroll survey, the monthly employment report includes
a separate household survey that covers self-employed workers (whose businesses
are unincorporated), unpaid family workers, agricultural workers and private
household workers who are excluded from the establishment survey. The household
survey showed an increase of 196,000 jobs over the month.
The
unemployment rate is also derived from the household survey. In August the
unemployment rate fell to 5.1% from 5.3% in July. The year ago rate was 6.1%.
The labor force participation rate was unchanged over the month and remains at
a 38-year low. The more comprehensive U-6 unemployment rate was 10.3% last
month, down from the year ago rate of 12.0%. The U-6 unemployment rate counts
part-time workers who would prefer full-time work and individuals who would
like a job but have given up the search. Of the approximately 94 million Americans
not counted in the labor force, about six million indicate they would like to
have a job. Although the headline
unemployment rate is very close to what might be considered full employment,
the elevated U-6 rate is an indication of ongoing slack in the labor market,
which may be one reason why upward pressure on wages has been slow to build.
Improvements
in the labor market have also helped bring down the share of workers who have
been jobless for 27 weeks or more. In August, that share was 27.7%, which was
up from July (25.8%), but down from 31.2% a year ago. The long-run average is
25.0%. Over the past 12 months, the number of long-term unemployed persons has
fallen by 779,000.
Summary: The pace of job
growth in August may have been a little slower compared to recent months, but a
broader survey of labor market indicators combine to reinforce our narrative of
continuing improvement in the labor market and the general economy.
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