U.S. Jobs: August = Return to Normal After Mini-Boom in July
It’s Labor Day weekend, but the U.S. Bureau of Labor Statistics has still graced us with its latest Employment Situation Summary. The numbers are in, and while they’re nowhere near those for July — 315,000 jobs added for August, versus a revised 526,000 for July — they’re still pretty positive.
From the perspective of the current quarter (June through August), the monthly jobs average comes in at 378,000. For the whole of 2022 so far, it stands at 436,000. At the same time, unemployment increased for the first time since the pandemic, but only by 0.2 percent, from 3.5 percent to 3.7 percent.
Taken altogether, job market growth seems to be slowing slightly, but is still in the range of "healthy growth." All in all, this strikes me as pretty good news, especially in view of inflation, which also dipped recently (from 9.06 percent in June to 8.52 percent in July).
The August inflation numbers haven't been released yet, but I'm hopeful that further shrinkage is forthcoming there as well. All this points to the “soft landing” for the economy that labor and traditional economists have been seeking. With down markets, inflation, and a strong job market, of course, there’s a lot of mixed signaling going on these days.
Diving into the Details
To start off, let's dip into the great news. Employment levels have finally exceeded overall employment at the time of the pandemic (by 240,000 jobs vis-à-vis February 2020). Looking in more detail at the economic sectors that the U.S. Bureau of Labor Services tracks, most of August’s growth occurred in professional and business services, healthcare and retail trade, with more modest gains in other sectors as well.
Here are some of the highlights:
Professional and business services grew by 68,000 jobs, with 14,000 going to computer systems design and related services, 13,000 to management and technical consulting services, another 10,000 to architectural and engineering services, and 6,000 to scientific R&D services.
On the losing end, legal services dropped 9,000 jobs. This sector has added 1.1 million jobs over the past year (September 2021 thru August 2022) and remains a big gainer in the overall job market.
Healthcare employment increased by 48,000 jobs, of which 15,000 went to physician’s offices, a like amount to hospitals, and 12,000 to nursing homes and residential care facilities. This sector is up by 412,000 jobs over the past 12 months, but remains 37,000 (0.2 percent) below February 2022 levels.
Retail trade rose by 44,000 jobs, with 15,000 workers flowing into general merchandise stores and a like amount into food and beverage stores, plus 10,000 into health and personal care stores, and 7,000 for building material and garden supply stores. To offset these gains, furniture and home furnishings stores lost 3,000 jobs.
Manufacturing grew by 22,000 jobs, with 19,000 of that into durable goods industries. This sector has added 416,000 jobs since September 2021.
Financial activities added 17,000 jobs, and the sector has added 200,000 jobs since September 2021.
Wholesale trade rose by 15,000 jobs, and is now returned to its February 2020 level.
Mining jobs increased by 6,000, thanks mostly to a 7,000 jump in mining support jobs offset slightly by losses elsewhere in this sector. Mining jobs are up by 68,000 since September 2021.
Leisure and hospitality added 31,000 jobs, but that’s about 60,000 jobs lower than the 90,000 average monthly gains from January through July of 2022. Of all sectors that the U.S. BLS tracks, this one remains furthest behind Febriuary 2022 levels, down by 1.2 million jobs (7.2 percent).
Other tracked sectors — construction, transportation and warehousing, information, other services, and government — were mostly flat for August.
Wages Keep Growing, But Don’t Pace Inflation
For August, average hourly wages increased by 10 cents to $32.36. Even so, hourly wages have grown by only by 5.2 percent — as compared to the July inflation rate of 8.52 percent, that’s behind by 3.32 percent). I expect continued and increased upward pressure on wages to persist until the inflation rate drops under 4 percent. How long that will take is anybody’s guess.
Other Voices on the Jobs report
The Washington Post observed that while job growth rates may be slowing, a 20-month positive streak continues unabated. They also observed that markets were both up and down in the wake of this report, with some investors hoping that cooling would temper the Fed’s planned upcoming interest rate hikes.
Others were apparently convinced that relatively high inflation trumps relatively modest job growth abatement. Overall, any signs that inflation is easing are welcome, especially to the beleaguered Biden administration. They also mention this month's report as in “the Goldilocks zone” (not too hot, and not too cool) and point at hopes of a “softish landing” for the economy vis-à-vis recession.
CompTIA’s more IT-focused analysis finds more action in the information (and related) sectors than the U.S. BLS does. They assert the tech sector added 25,500 jobs in August over five major employment areas: IT services and custom software development occupation category (up by 14,400 workers), computer and electronic products manufacturing (up by 4,500), data processing, hosting and related services (up by 3,200) and other information services, including search engines (up by 3,000).
The latest CompTIA IT Job Tracker shows a continuing upward trend in IT employment across the board.
Where to Next?
Good question! There’s a bit of an up-and-down dynamic going on. Employment, inflation, and markets are down, but not by much. Unemployment is up, but also not by much. Most economists seem to think things are settling down. I’m not sure if the conomy is just holding its breath or entering some steadier state. As usual, only time will tell. Stay tuned!