August jobs report: Sweating the small stuff
Aaron Terrazas
Chief Economist at Glassdoor | Sep 6, 2024
The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Chief Economist Aaron Terrazas.
In August, Federal Reserve Chair Jerome Powell announced during a speech in Jackson Hole, Wyoming that Fed officials “do not seek or welcome further cooling in labor market conditions.” An increasing number of labor market data points suggest that the on-the-ground reality is getting ahead of the Chair’s stated desire.
Key stats:
- Growth in payroll employment rebounded to +142,000 in August, accelerating from +89,000 in July (revised down from a previously reported gain of +114,000 previously reported). Jobs growth came in well under most forecasts. June payroll gains were also revised sharply downward from +179,000 to +118,000.
- The unemployment rate edged slightly lower to 4.2% and the number of unemployed workers fell by 48,000, mostly due to the passing of weather-related distortions from July. August broke a string of five consecutive months of increases in the number of unemployed workers – the longest such run outside of recessions going back to 1992.
- Average hourly earnings growth increased to 3.8% from 3.6% year-over-year, reversing a recent trend toward slower earnings and only the second reacceleration this year. For frontline production workers, annual hourly earnings gains moved back above 4%, after dipping below that threshold in July for the first time since May 2021.
Commentary:
The August jobs report shows a job market that is suddenly underperforming even tempered expectations, and our understanding of its prior trajectory has been repeatedly revised to the downside. U.S. companies hired fewer workers in August than had been forecasted, and hiring for June and July was revised sharply lower. While July’s number moved from soft to softer, June hiring was initially interpreted as a blockbuster month; that’s no longer the case. There was noticeable weakness in the healthcare sector which saw the slowest pace of hiring since March 2022, while a decline in manufacturing employment can likely be written off to seasonal plant shutdowns.
Despite slower hiring, the unemployment rate edged slightly lower in August – but was really flat if you look past weather-related distortions from July. The number of workers who are unemployed after losing temporary jobs shot up over the summer and is now in line with where it was during the depths of the pandemic – a reminder of the cyclical precarity of the booming gig economy. Hispanic workers have been particularly hard hit: Their unemployment rate has increased from 4.9% in June to 5.5% in August, the highest since the end of the pandemic and above 2019 levels.
Hiring and payrolls aside (and that is a big, important metric to put aside), the downshift in most jobs market metrics has been small. But in a moment of high drama around the path of interest rates – and all that many people suppose flows downstream from interest rate decisions including hiring, economic confidence, and so forth – small movements have loud echoes: They are small signals, with lots of noise.
Charts:
To speak with Aaron Terrazas about this report, please contact pr@glassdoor.com.
Aaron Terrazas
Aaron Terrazas is chief economist at Glassdoor. He oversees the Glassdoor Economic Research program, providing research, analysis and commentary on today’s evolving workplace and fast-changing labor market. Previously, Aaron served as the director of economic research at the trucking startup Convoy, and served in a similar role at the real estate marketplace Zillow. He started his career as an economist in 2012, supporting the work of the Deputy Assistant Secretary for Macroeconomic Analysis at the United States Treasury Department, and also worked as an analyst on immigration and labor markets at the the non-partisan Migration Policy Institute. He was educated at The Johns Hopkins University and at Georgetown University.
Tags:Labor Market
