Jobs grade for August: a ‘mild disappointment’
The U.S. economy added 156,000 jobs in August, slightly below what economists had predicted. So says the August jobs report, released Friday by the Bureau of Labor Statistics.
A bit more concerning: job numbers for June and July were revised down by 41,000 jobs. In short, not the kind of rosy report we’ve been getting used to in recent months, and the reason the unemployment rate ticked up from 4.3 percent in July to 4.4 percent.
The other negative: Average hourly wages barely budged last month, rising a minuscule 0.1 percent. It’s just one month, so not to panic, but if wage growth were to remain flat in coming months, workers will actually be losing ground to inflation. As it is, wages have risen just 2.5 percent in the past year, barely keeping pace with the cost of living, part of a long-term trend that has dispirited so much of the labor force.
One of our go-to economists, Justin Wolfers of the University of Michigan, singled out the weak wage growth in a Tweet this morning:
Wage growth remains stubbornly weak: Only 2.5% over the past year. That still suggests the Fed will continue under shooting inflation target
— Justin Wolfers (@JustinWolfers) September 1, 2017
We also like to see what Jared Bernstein has to say. Bernstein, a former chief economic adviser to former Vice President Joe Biden, pointed to the wage growth issue as well.
Don’t freak out over slightly weaker-than-expected report, but do worry about why wage growth remains so unresponsive to tighter job market. pic.twitter.com/ILs5pMjBmt
— Jared Bernstein (@econjared) September 1, 2017
In a blog post, Bernstein wrote that the economy still has room to add more jobs, a factor that could be suppressing wage growth.
“Wage growth has been uncharacteristically unresponsive to persistently low unemployment,” Bernstein wrote. He added, “hourly wages can’t catch a buzz.”
While the economy added fewer jobs than expected in August, several sectors showed signs of growth.
Manufacturing jobs increased by 36,000 last month, led by gains in the auto industry, metal fabrication and computer and electronic products. Overall, the sector has added 155,000 jobs since last November, despite the frequent forecasts of manufacturing’s demise. Perhaps, to paraphrase Mark Twain, the reports of manufacturing’s death have been greatly exaggerated.
The construction industry also added 28,000 jobs, a break from the previous five months, when job growth in construction remained relatively flat.
Jobs in mining increased by 7,000, another sign of the industry’s revival under President Donald Trump, who campaigned on a promise to create new jobs in mining and manufacturing, and has focused on the industries since taking office.
Yet despite modest gains in these sectors, the overall labor participation rate in August remained stuck at the historically low level of 62.9 percent.
And though the official unemployment rate is now 4.4 percent — some seven million Americans — it does not reflect the much larger pool of people still struggling to find full-time work: more than five million part-timers who say they want full-time work and nearly six million more Americans who say they want a job but are considered out of the labor force entirely because they haven’t been looking for work.
The Bureau of Labor Statistics reports a more inclusive measure of unemployment and underemployment, “U-6.” It stood at 8.6 percent in August.
The most inclusive measure we know of is the one we have calculated for years here at Making Sen$e. We call it U-7. Based on our NewsHour analysis of employment figures and including everyone who says they want full-time work but can’t find it, the total stands above 18 million, or 10.9 percent of the workforce (adding back in those who haven’t been looking).
That’s up from last month’s 10.6 percent. Let’s not forget that when we inaugurated U-7, not too long after the crash of ‘08, the number stood above 18 percent. But it is a little unsettling to see U-7 rise, if ever so slightly, after its steady progress in the right direction for ever so long.