Little Meat on the Bones from the US jobs report for August


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The August Employment Situation Report from the Bureau of Labor Statistics says that the total number of jobs in the US economy rose by +235,000 in the last month. Getting close to a quarter of a million jobs might sound like a big deal, but in the grand scheme of things, it’s easy to tame. Compare it to the previous month’s performance. July was originally reported at +943,000 jobs. That number has now been revised upwards to +1.053 million. Job creation in August has been faltering. It may have been due to the return of the coronavirus, via a delta variant, and the threat of a fourth wave heading into the fall. The best illustration of how to hire in August can be found in the “Leisure and Hospitality” sector. The economy-wide employment change in bars, restaurants and hotels/motels in the last month has been zero. However, it is encouraging to note that the annual change in employment in Leisure and Hospitality is strong +17.4%. Total employment now +4.3% YoY; Construction labor + 2.7%. Again, the construction sector in August was not the source of net new jobs. Instead, it cut 3,000 jobs, mainly in the engineering/civil field (-8000). However, secondary trade contractors have increased their salaries by +17,000 (see Chart 1). The seasonally adjusted national headline unemployment rate in August was 5.2%, down from 5.4% in July, and significantly improved from August 2020 at 8.4%. The last month’s non-seasonally adjusted U (NSA) was 5.3%, compared to 5.7% in July and 8.5% in August last year. The turnout (ie the percentage of people willing to work) has been stable at 61.7% for some time now. The NSA unemployment rate for August was 4.6%. In August 2020, it was 7.6%. The NSA U rate for the manufacturing sector is now 3.6% versus 6.7% a year ago. As part of the good news, manufacturers have increased their total employment level by +157,000 jobs over the past four months. The NSA U rate in durable goods manufacturing is now only 3.3%, or in other words, very narrow. The NSA U’s “leisure and hospitality” rate is still high at 9.1%, but keep in mind that a year ago, it was 21.3%. Compensation rates keep rising and as for wage increases, they keep accelerating. From Table B-3 (which includes supervisors) in the Employment Situation Report, August All Jobs’ earnings were +4.3% annually on both the hourly and weekly basis. For construction workers as a subset of “all jobs,” the annual compensation rise was +3.9% hourly and +3.7% weekly. From Schedule B-8 (which excludes chiefs), economy-wide earnings were +4.8% hourly and +5.4% weekly. Construction sector increases were slightly less abundant at +4.5% hourly and +4.7% weekly. However, the bottom line in terms of compensation rates is that they are creeping up around +5.0% yoy. Another set of good news concerns the number of individuals listed as long-term unemployed. In August, there was a quarter-million drop (-246,000) in the number of people unemployed for 27 weeks or more. The August nice job creation outcome was telegraphed by the weekly Initial Jobless Claims report (Chart 2) as the number is still above 300,000. The US labor market only gets really “hot” when weekly initial jobless claims subside by close to 200,000. None of this disturbs the stock markets (see Table 1). In August, DJI, S&P 500 and NASDAQ took another step up the ladder, setting new records along the way. Graph 1: Change in US Construction Employment Level, Month to Month (M/M) – Total and by Categories – August 2021 for each month, “net” = zero. The “sub-trade” in the BLS data is referred to as the “niche” trade. Data source: Bureau of Labor Statistics (BLS) Graph: ConstructConnect. Graph 2: Initial Job Claims in the US Weekly – As of August 28, 2021 Data Source: Department of Labor and Census Bureau. Diagram: ConstructConnect. Table 1: Stock Exchanges – Performance of Major Indices – August 31, 2021 Sources: New York Stock Exchange (NYSE), Standard and Poor’s (S&P), National Association of Securities Dealers, Automated Quotations (NASDAQ), Toronto Stock Exchange (TSE) and Reuters .Table: ConstructConnect.


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