Non-farm payrolls from the U.S. Bureau of Labor Statistics (BLS)came in unexpectedly higher this morning for the month of August: +162K, from a consensus estimate of +53K. It's not only the strongest jobs report we've seen since March of this year, it's the first up-month in the past five. The Unemployment Rateremained at +4.1%, as expected.
Even better, the previous two months saw upward revisions in these BLS figures, by +55K in total: July went from -23K to +21K, and June from +20K to +31K. That +31K, incidentally, is the trailing 12-month average, which is still likely below the amount of new hires per month needed to account for immigration reform and retirees leaving the labor market on a monthly basis.
Wagesgrowth was in-line with expectations at +0.3% month over month, +3.1% year over year. These numbers complement a healthy headline jobs number with relatively manageable earnings. The Average Workweekticked up to 34.4 hours — still fairly low, historically — and Labor Force Participationrose 20 basis points (bps) to +61.6% for the month. The U-6, aka "real unemployment," came down 20 bps to +7.7%, another positive development.
Leisure & Hospitality led the way with +62K new hires in August, and Food & Drinking Establishments added +59K positions. Perhaps this is a seasonal occurrence, coming as it did in the waning weeks of summer, but this segment in the labor force had led the country out of the Great Recession a few years back, and thus does hold significance. Local Government Education bounced back from -49K reported for July to +42K this time around. Construction, Manufacturing and Healthcare gained +22K, +16K and +13K, respectively.
Coming in negative for yet another month was the Information Employment sector: -23K. These include data processing, web hosting, publishing and broadcasting jobs, and this overall segment has averaged a -8K loss each month of the past year. Perhaps these are the foothills of AI appropriating service-sector employment? We'll put a pin in that for now.
Overall, this is report is good news. Bond yields began to climb upon the release of this report — and pre-market indexes began to slip a tad — but it would perhaps be an overreaction to assume these numbers are pushing up the odds for a Fed interest rate increase in a couple weeks. What these jobs numbers confirm is that the labor market remains active but not spiraling out of control; for now we see this as a winning combination.
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This article originally published on Zacks Investment Research (zacks.com).
