 | Non-farm payrolls declined 54,000 in August |
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Implications: The employment situation improved much more than the consensus expected in August. The demand for labor is growing. Right now the primary beneficiaries are those already in the workforce. However, in time, those looking for work will benefit more as well. Private payrolls increased 67,000 and were revised up by 66,000 for the prior two months, bringing the net gain to 133,000.
The index of total hours worked in the private sector was unchanged in August, but only because July was revised upward. So far this year, total private hours worked have been rising at a 2.8% annual rate. Meanwhile, average hourly earnings increased 0.3% in August and are up at a 1.9% rate in 2010. Putting these figures together – hours and wages per hour – shows that "real" (inflation-adjusted) cash pay has been growing at a 4% annual rate so far this year. This is more than enough to propel consumer spending upward, while also leaving room for households to keep paying down their debts.
The unemployment rate increased in August to 9.6%. However, the increase was completely due to a 550,000 rise in the labor force, which we see as a positive signal. So far this year, private payrolls are up 95,000 per month while civilian employment – minus the government sector – is up 218,000 per month. This is enough to gradually bring down the unemployment rate. In other recent news, pending home sales – contracts on existing homes – increased 5.2% in July, signaling a small increase in settlements on existing homes in August.
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