Slow Growth Returns with August Employment Report

It's the first Friday of the September, when the US Bureau of Labor Statistics dishes out employment data for August. The report is out, and the numbers deliver a triple dose of less-than-stellar disappointment, including something just for folks who work in the information section (where IT pros dominate).

Disappointment number one is that, despite ADT numbers and consensus forecasts that the jobs created number for August would be 177,000 or thereabouts, the actual job creation figure for August is 151,000. The second disappointment is that this number — around 150,000 — also comes very close to the long-term monthly average for the period from 2012 through the present.

You can see the trend on the bar chart below (courtesy of The New York Times), which tracks jobs from October 2013 through August 2016.. For the period on display, the average falls around 170,000. The further back you go, however, the more it dips closer to this month's number.

Looking over the monthly job figures on display in the bar chart, we see plenty of months in the 200,000 to 300,000 jobs per month range, though only three months at or above 300,000 (all in 2014). For 2015, 9 of 12 months were in that range. For 2016, with 8 months of coverage, only 3 fall in that range.

Long term, this appears to suggest that the trend is somewhat south of 200,000 jobs per month. Because economists generally believe that numbers over 300,000 are needed to demonstrate vigorous job growth, we appear mired in the swamp well short of that level.

Hence my assertion that we're stuck in slow growth mode yet again. Sigh.

Disappointment Number 3: Just for IT

Table A-14 reports that the information sector had an unemployment rate of 5.2 percent in August 2015, for a total of 151,000 jobs. In August 2016, the unemployment rate dropped to 5.0 percent, with a total of 130,000 jobs. On the face of these figures, it looks like things have improved just a bit.

Further analysis, however, shows this supposition to be incorrect. Dividing the job count by the rate produces the sector size. For August 2015, it comes out to just over 2.9 million jobs in the information sector. For August 2016, the number of jobs in the sector calculates to 2.6 million on the nose.

That indicates a reduction in sector size of around 300,000 jobs over the past year (it's actually closer to 304,000, if you do the math). Although IT jobs also show up in other sectors in Table A-14 (because IT folks work in all industries to some extent or another), this is still not a cheerful state of affairs.

Given that IT is considered an engine of economic growth — as well as the sector in which I and many other readers of these words live and work — this does not bode well for future our own growth and prosperity, either.

Given that there's been relatively more variability in the 2016 numbers than in the past two years (and more), we can only hope that the variation swings to the higher-than-average side and stays there for a while. Do I think this is possible? Yes, I do. Do I think it is likely? Maybe, maybe not.

We'll just have to wait and see. Stay tuned!