August BLS Report: Labor Market Pulling in New Workers Despite Recession Chatter
This morning’s jobs report signals that the slowing but healthy labor market continues to chug along. Employers added 130,000 jobs to nonfarm payrolls in August, slightly below expectations, and an even weaker 96,000 to private, non-government payrolls. Despite the slower growth in jobs added, labor force participation did perk up, a sign that the healthy labor market is still drawing in workers from the sidelines.
The labor force participation rate perked up to 63.2 percent in August, up from 63.0 percent in July. Similarly, the employment to population ratio picked up 0.2 points, ending at 60.9 percent. Those increases signal that the tightness of the labor market is putting upward pressure on labor force participation despite an aging population pulling it down.
The unemployment rate stayed at 3.7 percent, dropping slightly but not enough to tick down a full tenth of a percentage point. The unemployment rate remains near its lowest level in 50 years, again signaling the strength of the labor market for workers as the number of job openings continues to exceed the number of unemployed workers.
Growth in average hourly earnings stayed flat at 3.2 percent. While continued positive wage growth is good, the increase is stubbornly low given the tightness of the labor market and is a deceleration from its peak of 3.4 percent in February. Average weekly hours also rebounded to 34.4 from 34.3 last month, arresting a drop in weekly hours that may have signaled employers were cutting hours in response to weakening economic conditions.
Which Industries Are Hiring?
The strongest sectors for hiring were health care and social assistance (+36,800 jobs added), professional and business services (+37,000), and government (+34,000). Health care and professional services have both grown strongly across 2019, carrying the labor market despite weakness in the goods-producing sectors. Additionally, the increase in temporary help services (+15,400) is a good sign that employers are not cutting back on the most flexible parts of their workforces in the face of recession chatter.
The increase in government hiring (+34,000 jobs added), likely reflecting a temporary bump in Census workers. The Census Bureau has reported it expects to hire 40,000 workers through October, so we expect another small bump from Census-related jobs in next month’s report.
Construction rebounded, adding 14,000 jobs in August after losing 2,000 in July. The housing market has been sending mixed signals lately, but low mortgage rates may be pushing construction companies to hire more to support increased demand for housing.
Manufacturing continues to stagnate, adding only 3,000 jobs in August. The contraction in manufacturing reported by ISM earlier this week and a 15.9 percent drop in manufacturing job openings on Glassdoor haven’t yet translated into job losses. Over the next few months, we expect more insight into how the latest round of tariffs are affecting the industry.
Retail lost 11,100 jobs in August, continuing a trend of month-over-month declines. Despite strong consumer spending, increasing labor costs and the rise of e-commerce are keeping retail hiring down even as we begin to enter the holiday hiring season. We’ll be watching the next few reports for signs that the holiday retail hiring season has slowed or that the latest round of tariffs are having a larger effect on the retail industry.
Overall, today’s jobs report is still a good sign for the labor market, indicating that workers continue to come in off the sidelines. However, the pace of growth has slowed and sectoral weakness in manufacturing and retail don’t bode well for an economy dealing with escalating trade tensions. Despite a rising volume of recession chatter in August, this report indicates we still have green fields ahead for the time being.
To speak with Daniel Zhao about today’s jobs report or to discuss labor market trends, contact pr at Glassdoor dot com. For the latest economics and labor market updates, follow @danielbzhao on Twitter and subscribe to Glassdoor Economic Research.