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U.S. Job Growth Slows in August


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The U.S. labor market pulled back in August, generating 156,000 new positions during what ended up being the third-worst month for job growth so far this year, according to the latest national employment report from the Bureau of Labor Statistics.

Downward revisions to job gains in June and July, meanwhile, knocked off 41,000 previously reported jobs from U.S. payrolls. Average job growth over the course of the past three months is now believed to have clocked in at 185,000. During the same period a year ago, average monthly job growth eclipsed 254,000.

"Most sectors continue to show positive rates of growth, but admittedly, momentum in the pace of hiring has slowed," Sam Bullard, a senior economist and managing director at Wells Fargo Securities, wrote in a research note Thursday.

Indeed, many major sectors still drummed up a respectable number of jobs last month, particularly on the goods production side. Mining and logging outfits added 6,000 positions after payrolls fell flat in July, while construction companies contributed 28,000 positions after shedding 3,000 the month prior.

And manufacturing payrolls climbed by 36,000 – a 10,000-position improvement from July.

The service-providing sector, meanwhile, pulled back significantly, generating just 95,000 new positions after ginning up 179,000 in July. Health and social assistance outfits, which have for months generated substantial gains for the labor market, accounted for less than 17,000 new positions in August after contributing more than 43,000 a month prior.

And the information sector shed 8,000 positions for its 11th consecutive month of losses.

"While these numbers are down from July, market observers may still be upbeat about where we stand heading into Labor Day," Mike Loewengart, vice president of investment strategy at E-Trade, said in a statement Friday.

Indeed, while August's 156,000 new positions are certainly nothing to sniff at, last month's performance still represents a step down from the pace of expansion to which economists had recently become accustomed. But the softness wasn't entirely unexpected.

Analysts warned throughout the week that Friday's jobs report was likely to come in on the weak side. BLS has historically reported low initial employment estimates for the month of August, but those numbers are typically revised upward in subsequent months.

Mark Zandi, chief economist at Moody's Analytics, told reporters during a conference call Wednesday that the initial estimate could be 50,000 to 100,000 jobs shy of how the labor market actually performed in August.

"August is always a squirrely month for the BLS release, or at least it has been since the recession," Zandi said of what he referred to as the bureau's "August bias" masking a "very impressive run in the U.S. labor market."

Several theories exist as to why August has historically been such a soft month. But Zandi said the most likely explanation is that folks, take vacations at this time..

"The response rate from particularly larger companies to the BLS survey is lower in the survey week in August because of the holidays and vacations of the large companies," he said. "As a result, the BLS doesn't have all of the data."

The report also found the national unemployment rate ticked up slightly to 4.4 percent, while labor force participation held steady at 62.9 percent. And average hourly earnings in August ticked up 9 cents to $26.39, representing a 2.5 percent gain on the year.

That's hardly a blistering pace of wage expansion but continues the narrative that U.S. workers are slowly but surely seeing their paychecks inflate.

"The issue of pay raises is at the heart of the most persistent complaint about the state of the job market," Mark Hamrick, a senior economic analyst at Bankrate.com, said in a statement Thursday. "Though, as Baby Boomers exit the workforce, employers are able to substitute lower-paid younger workers whose health care is also less expensive, thus keeping inflation lower."

 

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