Implications: The employment report for August was ugly but does not indicate a recession. Private-sector payrolls increased only 14,000 including revisions to June and July and wages fell. Average hourly earnings declined 0.1% and the length of the workweek dipped by 0.1 to 34.2 hours. Controlling for a Verizon strike, now over, that temporarily sidelined 46,000 workers, private payrolls would have been up 60,000 including revisions. We think August's weakness was largely due to financial turmoil in Europe and large swings in the stock market. This has brought much uncertainty to the hiring arena. In the past year private sector payrolls have still increased 142,000 per month, and this trend will accelerate in the second half of the year as the economy continues to recover, and businesses realize a "double dip" is not going to happen. The biggest positive news in today's report was that civilian employment, an alternative measure of jobs that includes start ups, increased 331,000 in August. In other recent news, despite Hurricane Irene, same-store chain store sales were up 4.6% in August compared to a year ago, no different than in July and much better than if the US were entering recession. Also, autos and light trucks were sold at a 12.1 million annual rate in August, as the consensus expected, down 0.8% from July but up 5% versus a year ago.
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Posted on Friday, September 2, 2011 @ 11:39 AM
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