By Greg Heym, Brown Harris Stevens Chief Economist and host of Crossing The Line
It's the first Friday of the month, which means it's time for another potentially scary jobs report.
August Job Growth Slightly Below Forecast
Another month where jobs didn’t rise as much as expected, although August’s data wasn’t as disappointing as July’s. Here are the details:
-
Employment rose by 142,000 last month, below the 161,000 Dow Jones forecast.
-
Job gains in June and July were revised downward by a total of 86,000. Ouch.
-
The unemployment rate ticked down from 4.3% to 4.2%.
-
Average hourly wages rose 0.4% last month and 3.8% over the past year. Both those figures were slightly above estimates.
On the surface this doesn’t seem like a bad report, as job growth rose from a downwardly revised 89,000 in July, to 142,000 in August. Add to that a slight decline in the unemployment rate and wages growing faster than expected, and things seem pretty good. But are they?
Here’s what has me concerned:
We keep seeing large downward revisions to the monthly employment numbers. Remember how the stock market panicked after only 114,000 jobs were gained in July? That increase is now just 89,000, and June’s increase fell from 179,000 to 118,000. With revisions like this and the 818,000 jobs subtracted from the 12 months ending March 2024, how can we be confident the Fed has the accurate data it needs to make decisions? Do these revisions mean the Fed is behind the curve and should have started cutting rates already?
Some other concerns of mine include:
-
The number of job openings just fell to its lowest level since January 2021.
-
According to the household survey, all the August job gains were in part-time positions.
Enough of my concerns, I’m sure many of you are wondering how this report will impact the Fed’s rate decision later this month. We all know they are going to cut, but the big question is by how much. Based solely on the August jobs report—which isn’t great but isn’t a disaster either—I would expect them to cut 25 basis points, as going to 50 might cause some chaos in the markets. But keep in mind that before they announce their decision on September 18, we still have August data on CPI, PPI, and retail sales coming out.
So, stay tuned, and prepare for what could be a very bumpy ride on the way to the Fed’s meeting.
Have a great weekend, and let’s go Jets!
