Statement from Auction.com Research
Topic: August Sector Unemployment Report
Chris Muoio, senior associate and economist with Auction.com Research, says the Bureau of Labor Statistics (BLS) August employment data hints at a slow down in job growth:
"The Bureau of Labor Statistics (BLS) released its August employment data today, and the labor market appears to have softened further. July’s gain was revised significantly lower from 162,000 to 104,000 and August’s increase was a tepid 169,000. The average job gain over the past twelve months has now slowed to 184,000. This leaves a second half slowdown in play, especially given the new geopolitical tensions and potential disruption from a fight over the federal budget and debt ceiling.
- Despite the revisions and softer payroll data, unemployment fell 10 Basis Points (BPS) from the month prior. Unemployment now measures 7.3 percent, but the decline is misleading, as it came from a fall in the labor force participation rate to new cyclical lows and not employment gains. This is another concerning data point for the economic recovery going forward, as more people are giving up looking for work at a point in the cycle where this should not be happening.
- The Maximus Advisors Employment Acceleration Index further underscored the weakness by sliding into negative territory. The index had slid from 8.7 in June to 3.2 last month, before falling to -19 this month. The index measures the breadth of growth across the economy and its earlier slide warned of the subsequent weakness we are now seeing in the headline payroll figure.
- The retail sector picked up strength in August, as Clothing Stores, Electronic Stores, Home Improvement and Food stores all saw payroll gains over the last three months. Clothing stores saw the strongest gain, with payrolls rising 2.6 percent over the last three months and 5.4 percent over the last year. Electronics, Home Improvement and Food stores have seen employment rise by 1.2 percent, 1.1 percent and 1.1 percent over the last three months respectively. This paints a healthy picture of the consumer, as retailers are hiring.
- Another worrisome detail in the report is cooling in hiring by the construction sector, which had been a driver of gains. Heavy and Civil Engineering employment has seen employment rise just 0.3 percent over the last month. Nonresidential building construction employment has expanded by just 0.1 percent, while residential building construction has been even weaker, with payrolls falling 0.2 percent over the last three months. Perhaps the recent rise in interest rates really is derailing the initial housing recovery, putting a damper on this former growth driver."
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