Soft U.S. Jobs Report: +96K
August U.S. Labor Report released this morning…
- August Nonfarm Payrolls +96,000, below +130,000 expectation
- August Private Payrolls +103,000, below +142,000 expectation (Figure 1.1)
- Unemployment Rate declined to 8.1% from 8.3% last month as 368,000 people left the work force
- The Participation Rate fell to 63.5% from 63.7% last month. The 63.5% rate is the lowest since September 1981.
Revisions to last month…
- July Nonfarm Payrolls revised lower from +163,000 to +141,000
- July Private Payrolls revised lower from +172,000 to +162,000
August Labor Report composition…
- Underemployment Rate 14.7% from 15.0% last month
- Change in Household Survey -119,000, last month -195,000
- August Manufacturing -15,000 below +10,000 expectation (Figure 1.2)
- July Manufacturing revised lower from +25,000 to +23,000
- Service jobs rose +119,000
- Construction jobs rose +1,000
- Retail jobs rose +6,100
- Government jobs fell -7,000
- Temporary Workers fell -5,000
Labor market expectations over the next few months…
While market participants have turned away from the fiscal cliff conversation, I expect it remains prevalent on the minds of employers. In fact, I expect further disappointing labor figures over the next few months as employers hold off on hiring intentions ahead of potential $500 billion collective tax increases, sequester spending cuts, and benefit expirations as the calendar turns into 2013.
The current November election leader composition – President Obama second term, Republican Congress continued majority, and potential dead heat in the Senate – cautions that the grand compromise thesis will be more difficult to achieve. More likely, Washington will be absent of any holiday spirit as they negotiate a fiscal cliff compromise during December and January.
Figure 1.1 Private Sector Jobs, September 2007 to September 2012
Figure 1.2 Manufacturing Jobs, September 2007 to September 2012