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New Jobs Reach 201K, Unemployment 3.9% — Still Goldilocks


Friday, September 7, 2018

Another strong Jobs number was released before the bell this morning, with the Bureau of Labor Statistics (BLS) monthly non-farm labor report posting 201K new jobs in the month of August. The Unemployment Rate remained steady at a still-very low 3.9%, even though consensus was looking for another tick down on this headline.

Average hourly earnings — one metric beneath the headline that’s gotten increased focus the longer the labor boom has progressed without notable wage gains — rose its highest level since 2009, 10 cents per hour or 0.4% month over month. Year over year, average hourly earnings are up 2.9% — consistent with past months and still relatively low considering the long stretch of job gains overall.

Monthly jobs totals for June and July were revised down by a total of 50K, with last month’s headline down to 147K from the originally reported 157K, and June’s very impressive 248K initially posted down to a still-impressive 208K, bringing the 3-month total below 200K to 185K. This is still roughly double the amount of jobs required to balance those leaving the workforce in the aging United States populace.

As per form, Healthcare led the way with 33K new jobs last month — pretty much in-line with yesterday’s ADP ADP tally — followed by Construction with 23K and Transportation at 20K. For the first time in a while, however, we did see some net job losses in certain industries: nearly 6K fewer Retail jobs, nearly 5K fewer jobs in Autos and -3K in Manufacturing — something which is not consistent with ADP’s numbers and other recent healthy figures in this industry for the past year or more.

Labor force participation dipped a tad to 62.7%, still appearing like our employment situation could improve further, although part of this is, no doubt, new retirees from the baby boomer generation each month. As stated above, our monthly jobs numbers — even if they disappoint expectations on the headline — are more than healthy enough to sustain our long-term robust economy.

The U-6 number, the so-called “real unemployment” figure which includes people who are under-employed, fell even further, to 7.4%. For much of the recovery which began a decade ago, it took a while for this metric to duck below 10%, for some perspective.

Market indexes aren’t exactly throwing a party for these numbers, however, although one could easily argue we remain within a Goldilocks range — not too hot, not too cold. The Fed is going to raise interest rates another quarter point next week, and that’s already baked in the cake. This morning’s employment numbers should not cause so much as a raised eyebrow from anyone in the Federal Open Market Committee regarding the state of jobs and the economy in the U.S. today.

Mark Vickery
Senior Editor

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