August US job gains slowed significantly

August US job gains were much weaker than analysts had been expecting. According to the Bureau of Labor Statistics, part of the US Labor Department, total nonfarm payroll employment grew by 142,000 in August, reducing the unemployment rate by one-tenth of a percentage point to 6.1%.

For the first time since February, in the retail sector payroll numbers declined in August. There was no job growth registered in manufacturing.

Economists had expected more job gains. August’s increase was the smallest in eight months. With these latest data the Federal Reserve is likely to wait longer-than-expected before considering raising interest rates.

Markets happy

Market investors actually welcomed August’s job report. Stock futures were pushed higher as traders felt more certain that monetary policy is likely to remain loose for some time. Bond yields declined, with 10-year Treasury note yield declining to 2.42%.

June and July job growth data was revised down – there were 28,000 fewer jobs created than registered in the initial reports.

Analysts have warned that seasonal factors may have skewed August’s figures. Most expect the data will eventually be revised upward. In 2013, August’s initial report showed 169,000 job gains. This was ultimately revised up to 238,000. In 2011, The Bureau posted zero job creation – it was eventually revised up to 104,000.

The Bureau added that strong job gains were registered in health care, and professional & business services.

Below are some highlighted data from the Bureau:

  • The participation rate, i.e. the proportion of working-age Americans in the labor force, declined from 62.9% in July to 62.8% in August.
  • Average hourly earnings increased by 0.2% to $24.53, compared to $24.57 in July, and by 2.1% from August 2013.
  • Private hiring rose by 134,000 in August, the weakest gain in eight months.
  • The underemployment rate, i.e. part-time employees who’d prefer a full time job plus people wanting to work but have given up trying to find a job, fell from 12.2% in July to 12% in August.
  • The number of people out of work for at least 27 weeks – the long-term unemployed – stood at 2.96 million in August, the lowest figure since January 2009 (2.7 million).

Bloomberg Businessweek quoted Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, who said “In the coming quarters, we should see some slowing in payrolls gains. There are still some areas where we’d like to see further improvement in the labor market, such as the number of long-term employed and the pace of wage growth.”

Unemployment among major worker groups in August:

  • Adult males: 5.7%,
  • Adult females: 5.7%,
  • Teenagers: 19.6%,
  • Whites: 5.3%,
  • Blacks: 11.4%,
  • Hispanics: 7.5%,
  • Asians: 4.5%.

The Labor Department reported on Thursday that initial jobless claims increased by 4,000 to 302,000.