The Jobs Report Is Bad (But Maybe Not Bad Enough To Help Job Seekers)
Today’s jobs report from the labor department showed the addition of 142,000 jobs in August, less than the 160,000 jobs forecasted by economists. The unemployment rate ticked down to 4.2%, mostly reflecting workers returning from temporary layoffs.
Only a few industries added jobs last month, including construction, healthcare, and social services. In addition, the Bureau of Labor Statistics lowered its tally for June and July by 86,000 jobs, continuing a trend of downward revisions.
What It Means for Job Seekers
In one sense, today’s news isn’t bad enough. Although the jobs data itself was worse than expected, wages rose 3.8% year-over-year — more than the 3.5% that economists say would align with the U.S. Federal Reserve’s goal of 2.5% inflation. That means that the Fed may be less likely to decide on a steeper rate cut at their meeting Sept. 17-18.
Why should job seekers care about rate cuts? In part, because higher interest rates mean higher borrowing costs for employers, who may be less likely to expand their businesses by hiring new workers. Higher interest rates also mean higher credit card bills for consumers, leading to less willingness to spend and tighter budgets for anyone who already carries credit card debt (about half of all Americans, according to Bankrate data).
In another sense, of course, the news is plenty bad — worse than previous jobs reports indicated. Last month, the BLS announced the largest revision to jobs data in 15 years. Between April 2023 and March 2024, the economy created 818,000 fewer jobs than initially reported.
Bottom line: The job market is as bad as you think it is, and if you’re struggling to find your next position, you are not the problem.
What Experts Are Saying
“The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth. The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.” –Nela Richardson, chief economist, ADP
“A consistent pattern of [jobs data] revisions in either direction often suggests the economy is at a turning point, and that government data is struggling to adjust to shifting patterns. So the recent downward revisions are yet another sign that the job market is weakening. …The downward revisions are part of a recent pattern. The initially reported numbers have tended to be revised down in subsequent months — and preliminary data released last month suggests the numbers will be revised down by even more in annual updates released next year.” –Ben Casselman, The New York Times
“Some financial analysts who typically avoid policy prescriptions are speaking out in favor of the Fed going for a larger-than-expected first interest rate cut. That includes Omair Sharif of Inflation Insights, who just wrote a note titled “Time to Cut 50bps” — which in monetary terms (a half-point cut) would be a more aggressive response to current weakness.” –Talmon Joseph Smith, The New York Times
Just Give Me the Data, Please
The Employment Situation Summary by the numbers:
Total nonfarm employment: +142,000 jobs
Unemployment rate: 4.2% (down from 4.3%)
Long-term unemployed: 1.5 million (unchanged)
Labor force participation rate: 62.7% (unchanged)
Employment-population ratio: 60% (unchanged)
People employed part-time for economic reasons: 4.8 million (unchanged)
Average hourly earnings: Up 14 cents (0.4%) to $35.21.
Industries that added jobs:
Construction (+34,000 jobs)
Healthcare (+31,000 jobs)
Social assistance (+13,000 jobs)
Industries that declined:
Manufacturing (-24,000 jobs)
Industries that showed little change in employment:
Mining
Wholesale trade
Retail trade
Transportation and warehousing
Information
Financial activities
Professional and business services
Leisure and hospitality
Government
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