The dog days of August were upon employers last month, slowing their new nonfarm hiring to a modest 151,000. At 4.9%, unemployment was unchanged from July.
This morning’s monthly report from the U.S. Labor Department was lower than the 175,000 to 185,000 new jobs economists were predicting. It was also off the pace of the previous two months; June saw 271,000 new jobs added, a revision down from the previously reported 292,000 and July came in at 275,000, revised up from 255,000.
“This expansion is getting long in the tooth, so it shouldn’t be too surprising that trend job growth would begin to moderate,” Ryan Sweet, a senior economist at Moody’s Analytics Inc., told Bloomberg.
August historically is a slow hiring month. In three of the previous August reports, the Labor Department reported job losses. Last month’s new job growth was nearly identical to the 150,000 new jobs created in August 2015. However, in 2015 employers averaged 218,600 new jobs a month through August; this year the average is 181,500.
SHRM’s LINE report forecasts slower hiring in September compared to a year ago. “Job creation rates will fall in both sectors compared with a year ago,” says the report. “Layoff rates will vary, as fewer manufacturers will cut jobs and more service-sector employers will conduct layoffs.”
Goods-producers cut jobs
This morning’s government numbers show contraction in most goods-producing industries pulled down the overall hiring numbers. Factories shed 14,000 jobs. Construction, which has seen significant job growth over the last several years, lost 6,000 jobs from slowdown in commercial building and heavy and civil engineering.
Economists blame a strong US dollar, turbulence in global markets and the depressed petroleum industry for softening in manufacturing. The manufacturing index from Institute for Supply Management declined in August after expanding for the past five months. The report said, “Manufacturing contracted in August for the first time since February of this year.”
In the services sector, healthcare continued to add jobs, although more slowly than in recent months. In August, healthcare jobs grew by 14,400 with hospitals and doctors’ offices, clinics and similar facilities leading the way. In other sectors:
- Restaurants and bars added 28,700 new jobs.
- Retail by 15,100 jobs.
- Transportation and warehousing grew by 14,900.
- The finance and insurance sector added 14,400 jobs.
- Temporary employment shed 11,900 jobs.
Pay increased, but at a much slower rate than in July. Average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $25.73. Over the year, average hourly earnings have risen by 2.4%.
Unemployment has changed little this year. After declining in May to a low of 4.7%, the rate has remained at 4.9% since. Overall, there were 7.8 million unemployed persons in August. Other measures of labor utilization show that another 6.1 million are working part-time because they can’t find other work and another 1.7 million are not working, but have recently looked for work, though not during the survey period.