A twofer from the Dow Jones empire.
First up, MoneyBeat:
August Jobs Report: Everything You Need to Know
Welcome to “Jobs Friday,” that ever-so-brief moment when the interests of Wall Street, Washington and Main Street are all aligned on one thing: jobs.
Friday’s report was even more significant than usual, since it’s the last one officials from the Federal Reserve will see before they meet later this month to debate a potential interest-rate hike. A rate increase, if and when it comes, would be the first for the U.S. since 2006.
When the numbers came in at 8:30 a.m. New York time, they potentially muddied the waters instead of providing clarity. The Bureau of Labor Statistics said nonfarm payrolls rose a seasonally adjusted 173,000, well short of the 220,000 predicted by economists surveyed by The Wall Street Journal. But the unemployment rate fell to 5.1% from 5.3%, and some of the other underlying numbers painted a rosier picture.
Here at MoneyBeat HQ, we’re crunching the data, tracking the markets and compiling the commentary in real time.
9:28 am Another upward GDP growth revisionMacroeconomic Advisers joins Barclays in upping its Q3 GDP growth view by a tenth of a percent following the August jobs report. Macroeconomic Advisers now sees Q3 expansion of 2.3% from its prior 2.2% forecast.
“State and local employment rose sharply in August following upward revisions to June and July, implying more growth of gov’t comp in Q3,” said Ben Herzon, senior economist at Macroeconomic Advisers.
9:23 am September liftoff a 'very close call'Economists at Credit Suisse think the August jobs report meets the Fed’s threshold for “some further improvement” in the labor market. Still, it isn’t sold on a September rate rise.
“We are inclined to stick with our December Fed lift-off call as a central case, with Sept remaining a very close call – likely more contingent on financial markets than assessment of these data,” said Jay Feldman, director of U.S. economics at Credit Suisse. “If the domestic data alone were the issue, we’d probably be inclined to expect lift-off in September.”
9:19 am Fed will get more aggressive than the market expects
“Full employment” has arrived, even if it’s the kind of full employment that doesn’t spark much growth and leaves plenty of people still worried about the state of the economy.
With the official unemployment rate dropping to 5.1%, it has fallen into a range that the Fed defines as full employment, Capital Economics’ Paul Ashworth wrote in a note. “But the doves on the FOMC would point out that other measures, such as the still elevated proportion of involuntary part-time workers and the low participation rate, suggest that there is still slack left in the labor market.”
It’s a good point. The labor force participation rate is still milling about near 40-year lows. There are millions of people who not only are not working, but simply aren’t even counted as part of the labor force so they can be categorized as unemployed. It’s one reason the economy has been so sluggish throughout the recovery.
That said, the Fed can’t maintain that the economy is running at or even near full employment, and make a case against raising rates. “If the Fed doesn’t hike rates in September because of concerns about global economic growth and financial market fragility, it will have some explaining to do, because economic growth has been faster than it projected back in June and the unemployment rate has fallen much more rapidly.”
That means the central bank is going to have to start raising rates, whether the first increase comes in September or October or December. “Regardless of which meeting this year the Fed begins to raise rates, next year we expect core inflation to surprise on the upside, forcing the Fed into tightening policy more aggressively than the markets currently anticipate.”......MUCH MORE
UPDATE: "August Jobs Report: Economists React"
And from Real Time Economics:
The U.S. economy added 173,000 jobs in August, a bit of a slowdown from prior months but still a sign of steady expansion. Friday’s report from the Labor Department offered a few changes from the prior month on a range of measures, including the unemployment rate falling to 5.1% and an 8 cent rise in average hourly earnings.
The economy has added around 2.9 million jobs over the past 12 months. That’s down slightly from earlier this year, when the 12-month pace surpassed three million, but it is still well ahead of the 2.5 million jobs added for the year ended July 2014.
Meanwhile, the unemployment rate fell to its lowest level since April 2008. A broader gauge of underemployment, which includes workers who have part-time positions but say they would like full-time jobs, ticked down to 10.3%....
...A big drop in oil prices has squeezed the industry, which is shedding jobs.