August’s poor payroll growth of just 142,000 new jobs undercuts the optimistic economic narrative of the past year when more than 200,000 jobs were added in eleven of twelve months. But as economists like to say one month is not a trend and with most other data improving it is more likely that last month was a temporary setback rather than the start of a period of fading job creation.
It was the first monthly payroll growth below 200,000 since February and revisions to the June and July totals cut an additional 28,000 from the job rolls. Economists had forecast 230,000 new positions.
The unemployment rate fell to 6.1 percent from 6.2 percent because people left the workforce not because of job creation. The labor force participation rate fell to 62.8 percent from 62.9 percent. The participation rate is again at its lowest level in 36 years back to a point before women began to join the work force in large numbers.
Private payrolls rose 134,000 well below the 214,000 prediction. No manufacturing jobs were created, the first flat or negative month since July 2013, 18,000 had been predicted. July’s data was unrevised at 28,000.
The underemployment or U-6 rate which includes people who have looked for a job in the past year or are working part-time but want fulltime employment dropped to 12.0 percent from 12.2 percent. The standard unemployment or U-3 rate quoted above only counts people as unemployed if they had looked for work in the prior month.
Today’s report contrasts sharply with the most recent economic data, including August’s manufacturing and services ISM surveys, July’s factory orders and first-time unemployment claims which have a four week moving average of 302,750 among the lowest since before the financial crisis and recession.
Chief Market Strategist
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WorldWideMarkets Community Joseph Trevisani