Slowing Growth Marks August Jobs Data

The pace of job growth in the United States slowed a bit in August, decelerating from a prior two months’ worth of heady gains.

But as Reuters reported, even with the slowdown, the Federal Reserve still is likely on track to start winding down the portfolio of bonds accumulated over the years. The Fed’s buying frenzy, gathering up assets in the trillions of dollars ($4.5 trillion is on the balance sheet), were geared to help the U.S. recover from the financial crisis that hit a decade ago.

The headline numbers show, as estimated by the Labor Department, that non-farm payrolls grew by 156,000 in August, lower than the 180,000 jobs that analysts had thought would come in. That compares with a cumulative 399,000 jobs created over June and July. 

Wage growth was up $0.03 per hour and up 10 basis points, which, in turn, was slower than the 30 basis point growth seen in July. All told, said the newswire, wage growth was 2.5 percent measured year over year. That pace seems an extended one, having been born across five consecutive months. The total hours in the workweek also was down a bit, to 34.4 hours, down from 34.5 hours.

Reuters said that the latest job reading might be a “seasonal quirk,” as history shows that the August job count has traditionally been a bit low, only to be subsequently revised. 

The overall unemployment rate was 4.4 percent. Diving a bit deeper into the numbers, the manufacturing payrolls count was up by 36,000 jobs, the highest pace seen in four years, and construction jobs were up 28,000, the highest monthly surge since February.

Reuters said the “tepid wage growth” might keep the Federal Reserve from boosting rates in December. In the meantime, as ties in with inflation, the personal consumption expenditures price index (excluding food and energy expenditures) was up 1.4 percent through July, the smallest increase in more than a year. With relatively tame inflation, might consumption (and thus payments) remain buoyant?