by Calculated Risk on 9/06/2024 09:12:00 AM

The headline jobs number in the August employment report was below expectations, and June and July payrolls were revised down by 82,000 combined.   The participation rate and the employment population ratio were unchanged, and the unemployment rate decreased to 4.2%.

Construction employment increased 34 thousand and is now 665 thousand above the pre-pandemic level. 

Manufacturing employment decreased 24 thousand and is now 147 thousand above the pre-pandemic level.

Earlier: August Employment Report: 142 thousand Jobs, 4.2% Unemployment Rate

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate decreased in August to 83.9% from 84.0% in July.

The 25 to 54 employment population ratio was unchanged at 80.9% from 80.9% the previous month.

Both are above pre-pandemic levels and near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.8% YoY in August.   

Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons was little changed at 4.8 million in August. This measure is up from 4.2 million a year earlier. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons increased in August to 4.83 million from 4.57 million in July.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.9% from 7.8% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.533 million workers who have been unemployed for more than 26 weeks and still want a job, essentialy unchanged from 1.535 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is above pre-pandemic levels.

Job Streak

Through August 2024, the employment report indicated positive job growth for 44 consecutive months, putting the current streak in 5th place of the longest job streaks in US history (since 1939).  It appears this streak will survive the annual benchmark revision (that will revise down job growth).

Headline Jobs, Top 10 Streaks
	Year Ended	Streak, Months
1	2019	100
2	1990	48
3	2007	46
4	1979	45
5	20241	44
6 tie	1943	33
6 tie	1986	33
6 tie	2000	33
9	1967	29
10	1995	25
1Currrent Streak

Summary:

The headline jobs number in the August employment report was below expectations, and June and July payrolls were revised down by 82,000 combined. The participation rate and the employment population ratio were unchanged, and the unemployment rate decreased to 4.2%.

A weaker than expected report, and the three-month average employment growth has slowed to 116 per month.  The unemployment rate is up from a low of 3.4% in early 2023 to 4.2% in August (although down slightly from July).

by Calculated Risk on 9/06/2024 08:30:00 AM

From the BLS: Employment Situation

Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate changed little at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in construction and health care.
...
The change in total nonfarm payroll employment for June was revised down by 61,000, from +179,000 to +118,000, and the change for July was revised down by 25,000, from +114,000 to +89,000. With these revisions, employment in June and July combined is 86,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 142 thousand in August.  Private payrolls increased by 118 thousand, and public payrolls increased 24 thousand.

Payrolls for June and July were revised down 86 thousand, combined.

The second graph shows the year-over-year change in total non-farm employment since 1968.

In August, the year-over-year change was 2.36 million jobs.  Employment was up solidly year-over-year (Although the annual benchmark revision will lower the year-over-year change).

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate was unchanged at 62.7% in August, from 62.7% in July. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was unchanged at 60.0% from 60.0% in July (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate decreased to 4.2% in August from 4.3% in July.

This was below consensus expectations, and June and July payrolls were revised down by 82,000 combined.  

I'll have more later ...

by Calculated Risk on 9/05/2024 07:09:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 8:30 AM ET, Employment Report for August. The consensus is for 164,000 jobs added, and for the unemployment rate to decreased to 4.2%.

by Calculated Risk on 9/05/2024 03:47:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for August. The consensus is for 164,000 jobs added, and for the unemployment rate to decreased to 4.2%.

There were 114,000 jobs added in July, and the unemployment rate was at 4.3%.

From Goldman Sachs:

We are below consensus on payroll growth at 155k but in line on the unemployment rate at 4.2%.

We are below consensus on payroll growth because August payrolls have exhibited a consistent negative bias in initial prints over the last decade, Big Data indicators continued to slow, and the immigration boost to labor force and employment growth should be slowing (although still well above trend). On the positive side, we should see some rebound from severe weather in July.

We expect the unemployment rate fell 0.1pp on a rounded basis to 4.2%, a low hurdle from an unrounded 4.25% in July, reflecting the reversal of some of the temporary layoffs in July linked to summer auto plant retooling shutdowns or extreme heat.
emphasis added

• ADP Report: The ADP employment report showed 99,000 private sector jobs were added in August.  This was below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to 46.0%, up from 43.4% the previous month.   This would suggest about 40,000 jobs lost in manufacturing. The ADP report indicated 8,000 manufacturing jobs lost in August.

The ISM® services employment index decreased to 50.2%, from 51.1%. This would suggest 80,000 jobs added in the service sector. Combined this suggests 40,000 jobs added in August, far below consensus expectations.

• Unemployment Claims: The weekly claims report showed fewer initial unemployment claims during the reference week at 233,000 in July compared to 245,000 in July.  This suggests fewer layoffs in August compared to July.

• Conclusion: My guess is employment gains will be below consensus expectations.

by Calculated Risk on 9/05/2024 12:16:00 PM

Today, in the CalculatedRisk Real Estate Newsletter: Calculated Risk Returns! Existing Home Sales Increased to 3.95 million SAAR in July

Excerpt:

I'm back from Africa! I’ll be catching up on recent data over the next week, and I’ll post some photos / videos from my trip.
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales declined 2.5% year-over-year compared to July 2023. This was the thirty-fifth consecutive month with sales down year-over-year.

by Calculated Risk on 9/05/2024 10:04:00 AM

(Posted with permission). The ISM® Services index was at 51.5%, up from 51.4% last month. The employment index decreased to 50.2%, from 51.1%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 51.5% August 2024 Services ISM® Report On Business®

Economic activity in the services sector expanded for the second consecutive month in August, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 51.5 percent, indicating sector expansion in six of eight months in 2024. This month’s reading indicates sector expansion for the 48th time in 51 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In August, the Services PMI® registered 51.5 percent, 0.1 percentage point higher than July’s figure of 51.4 percent. The reading in August marked the sixth time the composite index has been in expansion territory in 2024. The Business Activity Index registered 53.3 percent in August, which is 1.2 percentage points lower than the 54.5 percent recorded in July and indicated continuing expansion after one month of contraction in June. The New Orders Index expanded to 53 percent in August, 0.6 percentage point higher than July’s figure of 52.4 percent. The Employment Index expanded for the third time in 2024; the reading of 50.2 percent is a 0.9-percentage point decrease compared to the 51.1 percent recorded in July.
emphasis added

The PMI was slightly above expectations.

by Calculated Risk on 9/05/2024 08:30:00 AM

The DOL reported:

In the week ending August 31, the advance figure for seasonally adjusted initial claims was 227,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 231,000 to 232,000. The 4-week moving average was 230,000, a decrease of 1,750 from the previous week's revised average. The previous week's average was revised up by 250 from 231,500 to 231,750.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 230,000.

The previous week was revised up.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 9/05/2024 08:15:00 AM

From ADP: ADP National Employment Report: Private Sector Employment Increased by 99,000 Jobs in August; Annual Pay was Up 4.8%

Private sector employment increased by 99,000 jobs in August and annual pay was up 4.8 percent year-over-year, according to the July ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab (“Stanford Lab”). ...

“The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth,” said Nela Richardson, chief economist, ADP. “The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.”
emphasis added

This was below the consensus forecast of 144,000. The BLS report will be released Friday, and the consensus is for 164,000 non-farm payroll jobs added in August.

by Calculated Risk on 9/04/2024 08:04:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• 8:15 AM: The ADP Employment Report for August. This report is for private payrolls only (no government).

• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 238 thousand initial claims, up from 233 thousand last week.



I'm back from a two-week trip to Africa. It was amazing!

I'll post some pictures and videos soon. This lion walked right past us in the Serengeti National Park in Tanzania.

by Calculated Risk on 9/04/2024 05:55:00 PM

Wards Auto released their estimate of light vehicle sales for August: August U.S. Light-Vehicle Sales Rise 4%, Ending Two Straight Declines (pay site).

Growth was solid in August despite the period’s results equaling a 7-month-low SAAR. However, after rising 3.4% year-over-year in the first five months of 2024, demand over the three months since then has been nearly flat. Calendar-year 2024 sales through August totaled 10.5 million units, 2.2% above like-2023’s 10.3 million.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards' estimate for Augus (red).

Sales in August (15.13 million SAAR) were down 4.3% from July, and down 1.1% from August 2023.

Sales in August were below the consensus forecast of 15.4 million.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.