Just the Facts
Five Facts on the August Jobs Report
By No Labels
September 7, 2018 | Blog
On Friday the Labor Department released its monthly hiring and unemployment figures for the month of August. The report revealed strong job growth, near record low unemployment, and an economy that has sustained an impressive rate of topline growth. Here are five facts on the August Jobs Report:
The United States added 201,000 jobs in August, beating economists’ forecasts of 192,000
This report represents another strong month for job creation and is a solid indicator that the U.S. economy is continuing to expand. August’s job growth is slightly higher than the average job creation of 185,000 over the past three months, which slightly outpaced 2017’s average monthly growth of 182,00 jobs. The solid report for August kept unemployment at 3.9%, near an 18-year low, and down more than six percentage points from a high of 10% in October 2009.
According to the jobs report, average hourly earnings rose by .4% in August, bringing year-over-year wage growth to an increase of 2.9%
Hourly wage growth is up .1% from .3% in July and is consistent with a tightening in the labor market. The year-over-year wage growth of 2.9% represents the fastest increase in growth since mid-2009 and helps remedy one of the few major problems with the current expansion. As Ward McCarthy, the chief financial economist at Jeffries states, weak wage growth “had been the one fly in the ointment in the last few years. Perkier wages are the final confirmation the labor market is back to normal.”
The manufacturing sector was one of the few areas that did not meet expectations
Weak growth in the manufacturing sector is particularly pertinent as it has been one of the Trump administration’s key areas of focus. According to the August jobs report the sector lost 3,000 jobs over the past month and previous estimates that the sector had gained 93,000 jobs during May, June, and July were revised down to 62,000. However, despite the recent setback President’s Trumps efforts to bolster the beleaguered sector have been largely successful as it has gained 350,000 jobs since the president took office.
The strong report shows that the economy has largely been able to withstand the political turmoil and trade disputes that have been an area of concern
Over the past several months economists, bankers, and politicians alike have expressed concern over growing trade disputes between the U.S. and several of its key trading partners, including Canada, Mexico, the European Union, and China. Central bankers see these disputes, if unresolved, as potentially catastrophic to the health of the global market. Despite these headwinds, the economy has continued to grow at an impressive rate.
The August jobs report makes it even more likely that the Federal Reserve will raise rates at least once before the end of the year
Central banks use rate hikes to deliberately curb growth in an effort to keep economies stable, prolong growth rates, and limit inflation and periods of economic decline. Fed Chairman Jerome Powell has already raised rates twice this year and following the central banks most recent policy meeting in late August it was expected that rates would be raised at least once more before the year was out. The impressive growth demonstrated in the August report makes it all but certain that rates would be raised soon. Even those who had previously opposed rate hikes, such as the president of the Chicago Fed, Charles Evans, stated that he now supports the potential hikes.