In August, the U.S. economy added only 22,000 jobs, unemployment remained the same at 4.3%, and the labor stats seem to hint at a predicament. Record low hiring rates during economic periods of uncertainty, high interest rates, and sudden market changes are indeed a focal point. Wages are skyrocketing as companies are doing all they can to win over talent and soaring consumer demand.
Wages remain unchanged
We thought to hit our target of 75,000 jobs added in August. And the Surgical Centers of America thought they would capture the magic 75,000 target. It is also important to note the evaporation of the Texas economic growth. There was a repeat a target loss at 75,000. 30,000 jobs were added in the last 3 months on the average. Yahoo finance still stall as the economy and finance world holds its breath waiting for something to happen. Bradley Saunders, North America economist at Capital Economics says:
“August’s Employment Report confirmed that the labor market has headed off a cliff-edge.”
While different sections of the economy did have jobs added and lost in the report, the overall picture was of something more varied, it was leading in education and health services that added an impressive 46,000 new jobs in August. Meanwhile, the manufacturing of durable goods and business services reported losses of 19,000 and 17,000 jobs, respectively. The rest of the economy contracted as well, shedding 16,000 jobs. ADP’s private payroll estimates paint a more optimistic picture, reporting an additional 54,000 jobs in the private sector in August. The increase in initial claims for unemployment, however, suggest that the layoff rate is climbing. Last week 237,000 new claims were filed, the most since June.
Wage growth has slowed in recent months, however, hourly revenue increased 0.3% in August іt and has increased 3.7% in the past year. This helped match the assumptions of a Wall Street panel, which indicates that they do not consider the control of inflationary pressures on employment to be a primary economic concern.
Will the fed cut rates in September?
The most recent jobs report has strengthened the view that the Fed will reduce interest rates in the upcoming September meeting.
CME data indicates traders are pricing in a 12% chance of a more aggressive 0.5% cut while fully expecting a rate cut of 0.25% in the upcoming meeting.
Tech stocks rallied and bond yields dropped after the report came out suggesting markets were beginning to expect more aggressive monetary loosening.
Carl B. Weinberg, chief economist at High Frequency Economics says:
“It’s really difficult for the Fed. They have to promote growth with out adding inflation, and this report is the perfect case for them to cut rates but they will do so gingerly,”
President Trump’s dismissal of the BLS head, for loss of data integrity and transparency, came after a suspicion of the credibility of BLS data when the May and June job figures were revised down upon presentation. These revisions reflect 258,000 jobs more than first estimated. Supporters of this view say it is a form of necessary oversight while critics view it as an attack on the independence of the institution.
Outlook: fragile recovery
The US labor market with slowing job growth, a slight increase in unemployment and stagnant wage increase seem to be in a delicate situation. These include expansion in the health care sector, and contraction in government and manufacturing. There is a Fed concern with interest Fed increases, and a concern with employment and other indicators for the month of September. All of this has to be considered for the upcoming month. Right now, the approach is the same: the workforce is shrinking, and there is a need to proceed with prudence.