U.S. Employment Takes a Half-Step Backward in August

After looking at the August 2017 jobs report from the U.S. Bureau of Labor Statistics, all I can say is "Back to slow(er) growth mode!" Though most of the major indices are little changed or unchanged, monthly figures for August come in at 156,000 down by 17 percent from the previous month's revised 189,000 number (reported in early August at 209,000).

The preceding three-month average of jobs added is 184,000, which puts the August number about 15 percent down by comparison. June was also revised downward from 231,000 to 210,000 jobs, so things trended downward for the quarter as well, in retrospect.

What does this portend? It indicates that while growth is still ongoing, it's at a fairly slow pace. What we're experiencing right now represents job growth that barely suffices to absorb new entrants to the U.S. labor market (recent graduates and other young people entering the work force for the first time).

But we really need to see numbers above 200,000 to pick up the slack that still remains in the labor force in the wake of the Great Recession of 2008-2009, now almost a decade behind us on the time line. Thus, we're in the odd situation of enjoying low unemployment — 4.4 percent is the official figure for August 2017 — while wages remain pretty flat.

The average hourly wage increased by $0.03 for August, up to $26.39, but is up only $0.65 for the past 12 months for a 2.5 percent increase overall. Thus, we're beating inflation, but only just barely. (It's reported at 1.7 percent for the 12-month period from August 2016 through July 2017, the most recent number available).

Like I said before, this is "slow growth mode" indeed!

Likewise, a closer look at the information sector (Table A-14 in the monthly report) shows little change in our home sector over the past year. In August 2016, we see 130,000 unemployed for a rate of 5.0 percent for the sector. In August, we see 131,000 unemployed for a rate of 5.1 percent for the sector.

Thus sector size for August 2016 is 2.62 million, while sector size for August 2017 is 2.56 million, a reduction of 60,000 jobs over the past year. While things are indeed little changed, the trend is ever so slightly negative and underlines a slow-growth/no-growth situation.

Such gains as occurred in the labor market for August were in manufacturing (36,000 jobs added), construction (28,000 jobs added), professional and technical services (which is home to those IT professionals who provide such services to third parties as contractors or consultants; 22,000 jobs added), healthcare (20,000 jobs added), mining (7,000 jobs added) and food services and drinking places (9,000 jobs added)

Other sectors were flat; namely, wholesale and retail trades, transportation and warehousing, information, financial activities, and government. There's not a whole lot of shaking going on, in other words.

Where do we go from here? The numbers say two strongly related things: First, nowhere fast, and second, pretty much sideways. Looks like slow growth mode is back with a vengeance. It's almost like watching paint dry ...