The Atlanta Journal-Constitution
WHAT JOBS REPORT SAYS ABOUT HIRING, WAGES
UNEMPLOYMENT CLOSE TO A 50-YEAR LOW
The U.S. economy added 130,000 jobs in August. Analysts on Wall Street had been expecting a gain of 160,000 jobs, according to Bloomberg.
The unemployment rate was 3.7% and remains unchanged. That is close to a 50-year low and a reflection of how strong the labor market has been recently.
Average hourly earnings rose 0.4%, bringing the 12-month increase to 3.2%.
The takeaway
The economy turned in a decent performance last month as businesses grew more cautious about hiring, according to the Labor Department’s monthly employment report released Friday. About 25,000 of the jobs added were temporary positions for the 2020 census.
Along with consumer spending, the labor market has been a source of stability for the economy, even as several gauges have turned downward and trade anxieties have mounted.
One worrying sign was that the private sector added 96,000 jobs. Not only was that well below the 150,000 gain that Wall Street analysts were expecting, it was weaker than the pace so far in 2019 and serves as an indication that businesses are becoming a little more reluctant to add head count. The report also revised down job gains for June and July by a total of 20,000.
Paul Ashworth, chief U.S. economist at Capital Economics, said the headline number in August was “flattered” by the big increase in census hiring. “But even allowing for that, there has been a clear slowdown in trend employment growth, with the three-month and six-month averages both at around 150,000 now, down from about 230,000 a year ago,” he said.
Despite the middling-headline number, other data in the report was more positive. The labor force participation rate rose to 63.2% from 63%, suggesting that workers who had been on the sidelines are gradually being lured back into the labor market. Average hourly earnings increased by 0.4%, which is more than analysts had expected. And the length of the average workweek increased after falling in July.
“Many of us are on tenterhooks waiting for this set of numbers,” said Carl R. Tannenbaum, chief economist for Northern Trust in Chicago. “Because of where we are in the business cycle, it’s taken on particular importance.”
Making vs. serving
One way to think about the economy would be to divide it into two parts: making and serving. The first covers businesses like manufacturing, mining and construction, while the other includes fields like health care, education, retailing and technology. The service economy is much larger, but goods-making sectors often point to what lies ahead. In recent months, manufacturing had paltry job gains even as service industries reported steady growth.
In August, factories added just 3,000 workers, while mining and logging lost 5,000 jobs. On the service side, the education and health category experienced a gain of 32,000 and employment in professional and business services was up 37,000.
Earlier this week, a key measure of the factory sector showed activity was contracting, which caught many analysts by surprise. They shouldn’t have been so shocked: Factories have been facing headwinds for months from the escalating trade war with China and slowing global growth.
The tariff impact
Musgrave Pencil Co. has been feeling the pressure from tariffs, but it has nevertheless been hiring. Musgrave, which is based in Shelbyville, Tennessee, would like to add at least five workers to its assembly line, said Henry Hulan, the company’s chairman and a grandson of its founder.
“We’re 50 miles south of Nashville, where there’s distribution centers, auto plants and hospitals, so there’s stiff competition to find workers,” Hulan said. Entry-level jobs at Musgrave pay $10 an hour — an increase of $2 from a year and a half ago.
“We don’t have any educational requirements — no degrees or anything,” he said. “We’re just looking for someone who is hardworking. It’s hard to pay much more when you’re competing with Indonesia and China.”