Unemployment Rate

Non-farm payrolls fell by 54,000 in August, about half the expected decline of 105,000, following a revised subtraction of 54,000 payroll jobs in the previous month (first reported as -131,000).  The majority of the decrease in jobs was again attributed to a cut in temporary census workers which had accounted for much of the gains reported in April and May.  Private payrolls grew 67,000 in August following a revised increase of 107,000 in July (first reported as a gain of 71,000).  Economists were looking for private payrolls to increase by 40,000.  The unemployment rate ticked up to 9.6% as a result of an increase in the labor force participation rate.  The underemployment rate, which includes people who have given up looking for work and those working part-time for economic reasons, increased 0.2% to 16.7%.  Manufacturing payrolls contracted by 27,000 in August compared to expectations of a gain of 10,000 and July’s increase of 34,000.

Summary:  The August employment report was positive on nearly every count: private payrolls exceeded expectations, July figures were revised higher, average hourly earnings increased while the hours worked held steady.  Employment data are generally considered a lagging indicator, though consumer sentiment is likely to rebound in September based, in part, on this report.  This positive news helps deflate the double-dip chatter, though more positive data relating to consumer spending will also be needed.

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