Financial Professionals


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

Source:  Bloomberg

Figure 1.2 Manufacturing Jobs, September 2007 to September 2012

Source:  Bloomberg



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