August Employment Report: More of the Same

The August jobs report doesn’t change the picture of a tight labor market that continues to get even tighter.  And it doesn’t affect the outlook for the FOMC, which we expect to raise rates at a pace of once per quarter until the funds rate is around its estimated neutral level. 

Payrolls posted a strong 201K gain in August, but downward revisions to the previous two months totaled 50K. While the three-month average gain declined to 185K, lower than recent readings, which have consistently been about 200Kor slightly higher, it’s too early to say there’s been a moderation in the underlying pace of payroll gains. That pace is still strong and more than sufficient for the unemployment rate to continue declining. Average hourly earnings increased a robust 0.37% in August, and the 12-month change increased to 2.9%, up from 2.6% a year ago. This will go some way toward resolving a source of tension for  FOMC policymakers, who have said they would have expected somewhat firmer wage gains to accompany such a tight labor market. However, weighed against the full range of wage data, the marginal impact of this firmer reading is slight. 

The unemployment rate remained at 3.9% despite a two-tenths decline in the participation rate, as both employment and the labor force declined similar amounts. The broader U-6 rate declined another tenth. These results from the household survey are a bit soft, but no cause for concern. The participation rate continues to move within a narrow band, as it has for the last couple of years. The unemployment rate is low and still declining, though at a slower pace since mid-2017.

Like this article?

Share on linkedin
Share on Linkdin
Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on pinterest
Share on Pinterest

Our Newest Content

Would you like a preview of our newest, members-only commentaries? Simply click the button below to see some of our newest commentaries and request a free trial today.


Please fill out the form below for a trial of our services.