Friday, September 2, 2016

"Economists React to the August Jobs Report: ‘Hiring Fell Back to Earth’"

From Real Time Economics:

How economists and analysts reacted to slower hiring and steady unemployment in August
U.S. employers slowed their hiring in August, with nonfarm payrolls rising by a seasonally adjusted 151,000 following gains of 275,000 in July and 271,000 in June, according to the Labor Department. The unemployment rate last month was steady at 4.9%. Here’s how economists and analysts reacted to Friday’s release, the final jobs report before Federal Reserve officials gather for their Sept. 20-21 policy meeting.

Hiring fell back to earth with the total change in hiring of 151,000, the private sector generating only 126,000 and the unemployment rate holding steady at 4.9 percent. In our estimation, the topline and private-sector number is indicative of the true trend in hiring, which late in the business cycle is slowing. We have made the case for some time that hiring is falling back to around 100,000 per month with risk to the downside given demographic changes and the pronounced slowdown in overall productivity.” –Joseph Brusuelas, RSM

“On the whole, this morning’s strong July employment report, despite the slower pace of job gains, indicates that labor market health remains intact and that therefore economic activity remains solid. Furthermore, this print should maintain the confidence of most [Federal Open Market Committee] members in the outlook. Most members will view this report as consistent with solid economic activity and will believe that…activity will continue to pull inflation upward toward their target. We maintain our call of a September rate hike.” –Rob Martin and Michael Gapen, Barclays

“The August employment report was not a disaster but it was just weak enough that any chance that Janet Yellen and her band of doves might think about surprising us and raising rates later this month just went out the window.” –Stephen Stanley, Amherst Pierpont Securities

“Admittedly, there are reasons to suspect that things are a little bit better than those figures suggest. There is a long history of the initial August payroll estimate coming in below consensus expectations and then being revised higher. Calendar quirks could also explain some of the weakness in earnings and hours worked last month, too. But even if Fed officials are suspicious, they will want to wait another couple of months, to ensure the data does rebound in September and that August is revised higher.” –Paul Ashworth, Capital Economics

“The breadth of payroll job growth in August was widespread across services industries but poor in goods-producing industries. Mining jobs fell by 9,000 in August, the twenty-third straight monthly decline totalling 225,000 jobs lost, or one-quarter of industry employment. Manufacturing jobs fell by 14,000 in August and construction jobs fell by 6,000. Private service-producing industries added 150,000 jobs over the month.” –Gus Faucher, PNC Financial Services Group