Key Points:
- Total nonfarm payroll employment in August rose by 130,000. The rise in June was 178,000
- Increase in the average hourly earnings to 0.4 percent in August from 0.3 percent in July
- The labor participation rate has risen from 63 percent in July to 63.2 percent in August
The employment situation for August shows that the rate of unemployment remains unchanged at 3.7 percent. The report for August contains a mixed bag of results, where some indicators have seen a slump, whereas others have seen a promising rise.
Major Ups and Downs in August
The total nonfarm payroll employment rose by 130,000. This is less than the revised average of 156,000 per month for the last three months. The job growth rate for the month has been poorer than in the previous months.
The data for June and July, although indicate higher growth than August, has been revised from the previously acknowledged figures. The payroll growth for the month of June has been revised from 193,000 to 178,000, and the payroll increase for July has been revised from 164,000 to 159,000 as per the Bureau of Labor Statistics.
The payroll growth for August has been considerably lesser than the rise witnessed in June and July, and this indicates a major slowdown in job creation for the month of August.
The challenges faced in August was not helped by the fact that, apart from the federal hiring, private payroll only grew by 96,000. This is considered to be the slowest pace of growth since February 2019. Also, the rise in federal hiring is largely due to the hiring of temporary workers for the 2020 survey.
On the positive side, the month of August has also witnessed an increase in the average hourly earnings, which rose to 0.4 percent from 0.3 percent in July. Also, the labor participation rate has seen a marginal rise from 63 percent to 63.2 percent.
Establishment Survey Data
The payroll growth (130,000) in August has been less than the average growth recorded so far in 2019, which stands at 158,000. The slump appears to be greater when compared to the overall average of the year 2018, which stood at 223,000.
There was an increase in private-sector employment by 96,000 with notable gains made in the healthcare sector and the financial sector. The public-sector employment rose by 28,000, largely due to the recruitment of 25,000 temporary employees for 2020 census work.
The health care sector has added 24,000 jobs in August, taking the value for the last 12 months to 392,000. The financial sector too added 15,000 jobs for the month, taking its 12-month tally to 111,000. Other sectors that added jobs in August include the professional and business services sector, social assistance, and mining.
Sectors that changed little to none in August include construction, manufacturing, transportation
and warehousing, and leisure and hospitality. The retail sector, on the other hand, lost about 15,000 jobs in the month.
Household Survey Data
There are no major changes in the unemployment rate of the major worker groups. The unemployment rate for major worker groups stands at:
| Workers Groups | Unemployment Rates |
| Adult Men | 3.4 percent |
| Adult Women | 3.3 percent |
| Teenagers | 12.6 percent |
| White population | 3.4 percent |
| Black population | 5.5 percent |
| Hispanic population | 4.2 percent |
| Asian population | 2.8 percent |
According to the data from August, the unemployment for ‘adult women’, ‘teenagers’, ‘Black population’ and ‘Hispanic population’ has seen a marginal decrease in the rate of unemployment.
The rate of labor force participation and the employment-population ratio has seen a marginal increase in August. Labor participation rate 63.2 percent, while the employment-population ratio also went up to 60.9 percent in August.
Final Analysis
The rate of job growth has considerably slowed down. Experts point out that the disagreements in trade deals between the United States and China could be one of the important reasons for the slump the US is facing in job creation.
However, the increasing wage rate and labor participation rate indicates a positive sign. It shows that people may make more money per hour than the earlier weeks and that more and more people are entering the job market.