Boom: US Adds 162,000 Jobs in August

Donald Trump and the GOP got some great economic news, right when they needed it most. With their high-stakes gamble on a midterm convention just days away, the Democrats likely planned to lean heavily on the “affordability” argument and the lack of growth in the US jobs market. 

At least for now, Trump has an answer. Last month, the US economy had its best month since April, adding 162,000 jobs, more than the rest of the summer combined. Late revisions also added more jobs from June and July to enhance the economic bounce:

Total nonfarm payroll employment increased by 162,000 in August, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places and in local government education. The information industry lost jobs. …

The labor force participation rate edged up to 61.6 percent in August but is down by 0.5 percentage point since January. The employment-population ratio, at 59.1 percent, changed little over the month and since January. (See table A-1.) 

The unemployment rate remained unchanged because the Household survey data remains as volatile as ever. Earlier this summer, people raised alarms over a supposed drop in the civilian labor force, claiming that workers were despairing so much (in a stable economy) that they were fleeing the workforce, never to return. In August, the workforce grew by 683,000 and the category of adults “not in labor force” dropped by 551,000. The Household survey is highly volatile in recent years, and monthly data should be taken with a grain of salt. 

The overall data is good this month, and a bit better from the last two months as well:

The change in total nonfarm payroll employment for June was revised up by 11,000, from +20,000 to +31,000, and the change for July was revised up by 44,000, from -23,000 to +21,000. With these revisions, employment in June and July combined is 55,000 higher than previously reported.

These are modest revisions to each month, but the aggregate upward change of 55,000 jobs is good news. It took the red ink off the board for July, which matters in psychological terms, even if it still leaves July as a poor month for job creation. There is even better news on wages and hours:

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $37.75. Over the year, average hourly earnings have increased by 3.1 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 11 cents, or 0.3 percent, to $32.53. (See tables B-3 and B-8.)

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.4 hours in August. In manufacturing, the average workweek edged up by 0.1 hour to 40.5 hours, and overtime was unchanged at 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours. (See tables B-2 and B-7.)

At the moment, this rate of wage growth is basically keeping up with inflation. That’s not great news, but at least workers aren’t losing significant ground as they did during the massive Bidenflation years. The continued wage growth shows that the jobs market is still healthy, albeit uneven, over the last two years. 

That came as a big surprise to the “experts,” who predicted less than a third of this growth:

The U.S added 162,000 jobs in August, the Labor Department reported Friday, a much-stronger-than-expected result that suggested the labor market shook off its early-summer doldrums.

The unemployment rate stayed steady at 4.1%. That leaves it at a historically low level that indicates the labor market remains generally healthy.

Economists polled by The Wall Street Journal had forecast the report would show the economy gained just 53,000 jobs, and an unemployment rate of 4.1%

The WSJ also points out that the Federal Reserve will feel a lot more comfortable taking aim at inflation after seeing a resurgence in hiring. That may not look like good news for the White House, where Trump wants to keep interest rates low, but it’s better than the alternative in the short run for Republicans in the midterms. The real problem with inflation isn’t monetary supply as much as it is the oil and diesel shocks from the war, but the Fed only has monetary supply as a tool. 

Finally, the WSJ also makes this salient point about the sharply changed contexts for jobs reports:

The U.S. has entered a phase where economists believe the country doesn’t have to add many jobs a month to keep the labor market steady.

The population is aging—the youngest of the baby boomer generation is eligible for Social Security retirement benefits this year—while the clampdown on immigration has reduced the supply of new workers into the labor force. In other words, the U.S. simply doesn’t have enough available people to deliver significant job growth.

That’s a concern all its own, one that relates to the post-modern funk in fertility that has plagued all Western nations. Attempting to fix that through mass immigration creates more and worse problems than it seeks to resolve, however, and the US is ahead of the curve on recognizing and fixing that. With population growth significantly curtailed, we don’t need 150,000 jobs a month for maintenance growth, or even 100,000. That makes this month’s data look even stronger. 

Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.

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