| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Nonfarm Payrolls - M/M | 170,000 | 40,000 to 190,000 | 187,000 | 187,000 | 157,000 |
| Unemployment Rate | 3.5% | 3.5% to 3.5% | 3.8% | 3.5% | |
| Private Payrolls - M/M | 147,000 | 15,000 to 170,000 | 179,000 | 172,000 | 155,000 |
| Manufacturing Payrolls - M/M | 2,000 | 1,000 to 5,000 | 16,000 | -2,000 | -4,000 |
| Participation Rate | 62.8% | 62.6% | |||
| Average Hourly Earnings - M/M | 0.3% | 0.2% to 0.4% | 0.2% | 0.4% | |
| Average Hourly Earnings - Y/Y | 4.4% | 4.3% to 4.4% | 4.3% | 4.4% | |
| Average Workweek | 34.3hrs | 34.3hrs to 34.4hrs | 34.4hrs | 34.3hrs |
Highlights
Nonfarm payrolls rose 187,000 in August, slightly above the consensus of up 170,000 in the Econoday survey of forecasters. However, there is a net downward revision of 110,000 in the prior two months that suggests hiring is generally slower than previously thought.
Nonetheless, in interpreting the August increase there are two more factors to take into account. First, the bankruptcy at Yellow Corp. led to a 36,700 decline in truck transportation. This will be a one-off and many of these workers could find jobs elsewhere due to a reported shortage of drivers. Second, the SAG-AFTRA strike cut 16,800 from payrolls in motion picture and sound recording industries. Once the strike is settled, these jobs will come back.
Payrolls for goods-producers are up 36,000 in August from a 22,000 increase in construction and 16,000 in manufacturing with a small offset from a 2,000 decline in mining. Private service providers' payrolls are up 143,000 in August, most of which comes from an increase of 97,300 in health care and social assistance. There are also solid increases of 40,000 in leisure and hospitality and 19,000 in professional and business services.
Average hourly earnings are up 0.2 percent in August from July and up 4.3 percent year-over-year. The year-over-year pace has been little changed for the past six months, but the monthly change suggests more moderate increases in the near future.
The unemployment rate is up 3 tenths to 3.8 percent in August to its highest since 4.0 percent in November 2022. The U-6 rate is up 4 tenths to 7.1 percent to its highest since 7.1 percent in May 2022. The large job losses in the trucking industry and strikes in the motion picture industry have probably temporarily boosted the unemployment rate. However, there are other sectors which have had decreases in payrolls.
The participation rate is up 2 tenths to 62.8 percent, its highest since 63.3 in February 2020, just before the pandemic disrupted the labor market.
The size of the labor force increased 736,000 to 167.389 million in August with an increase of 514,000 in the number of unemployed and the number of employed up 222,000. The number of persons working part-time for economic reasons is up 221,000 in August and job losers are up 294,000. Job leavers are 51,000 fewer for August. Job entrants probably including August graduates are up 94,000.
Fed policymakers will find the August employment report in line with their expectations for a cooling labor market in which the supply and demand for workers is coming back into alignment. The numbers should support a decision to pause in hiking rates at the September 19-20 FOMC deliberations, although that will depend on what the inflation data counsel when released on September 13.
Nonetheless, in interpreting the August increase there are two more factors to take into account. First, the bankruptcy at Yellow Corp. led to a 36,700 decline in truck transportation. This will be a one-off and many of these workers could find jobs elsewhere due to a reported shortage of drivers. Second, the SAG-AFTRA strike cut 16,800 from payrolls in motion picture and sound recording industries. Once the strike is settled, these jobs will come back.
Payrolls for goods-producers are up 36,000 in August from a 22,000 increase in construction and 16,000 in manufacturing with a small offset from a 2,000 decline in mining. Private service providers' payrolls are up 143,000 in August, most of which comes from an increase of 97,300 in health care and social assistance. There are also solid increases of 40,000 in leisure and hospitality and 19,000 in professional and business services.
Average hourly earnings are up 0.2 percent in August from July and up 4.3 percent year-over-year. The year-over-year pace has been little changed for the past six months, but the monthly change suggests more moderate increases in the near future.
The unemployment rate is up 3 tenths to 3.8 percent in August to its highest since 4.0 percent in November 2022. The U-6 rate is up 4 tenths to 7.1 percent to its highest since 7.1 percent in May 2022. The large job losses in the trucking industry and strikes in the motion picture industry have probably temporarily boosted the unemployment rate. However, there are other sectors which have had decreases in payrolls.
The participation rate is up 2 tenths to 62.8 percent, its highest since 63.3 in February 2020, just before the pandemic disrupted the labor market.
The size of the labor force increased 736,000 to 167.389 million in August with an increase of 514,000 in the number of unemployed and the number of employed up 222,000. The number of persons working part-time for economic reasons is up 221,000 in August and job losers are up 294,000. Job leavers are 51,000 fewer for August. Job entrants probably including August graduates are up 94,000.
Fed policymakers will find the August employment report in line with their expectations for a cooling labor market in which the supply and demand for workers is coming back into alignment. The numbers should support a decision to pause in hiking rates at the September 19-20 FOMC deliberations, although that will depend on what the inflation data counsel when released on September 13.
Market Consensus Before Announcement
A moderating but still solid 170,000 rise is the call for nonfarm payroll growth in August versus 187,000 in July which was a bit lower than expected. Average hourly earnings in August are expected to rise 0.3 percent on the month for a year-over-year rate of 4.4 percent; these would compare with 0.4 and 4.4 percent in the prior two reports. August's unemployment rate is expected to hold unchanged at 3.5 percent.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
