There was a big jump (50,000) in people quitting jobs (as opposed to involuntary layoffs, terminations, etc) in this month's data. I would rather see the unadjusted data as there seems a lot of seasonal anomalies as was expected. As always, it's what the market reads into the report.
AUG US JOB WEAKNESS OFFSETS JULY; SHARP DOWNWARD EARNINGS REVISION
By Chris Middleton and Joe Plocek
WASHINGTON (MktNews) - An unexpectedly weak August U.S. employment report coupled with an upward revision to the previous month's report produced a surprising back-to-back "flip-flop" in the U.S. third-quarter employment data and refocused attention on taking a two-month snapshot of the economy.
U.S. non-farm payrolls rose by only 124,000 jobs in August and average hourly earnings were up 0.2% for the month or only 3.5% year-over-year, well below most economists' expectations after the strong July report in which jobs rose a revised 338,000 and earnings climbed 0.5%.
More surprisingly, July's average hourly earnings figure was revised down to 0.3%, coming largely in the durables and motor vehicles area.
Bureau of Labor Statistics analyst Tom Nardone told Market News International as the report was being made public, that the offsetting large shifts in August and July caught the department off guard.
"The big thing this month was the switch in manufacturing. For July and August you have two fairly big offsetting seasonal movements, with manufacturing workers in July out on vacations and they come back in August."
"Whatever happened this year, the seasonal process for whatever reason didn't occur as expected. You have this flip-flop, a strong July and then come out with a weaker August," Nardone said.
On average hourly earnings, Nardone commented, "3.5% (yoy) is not that different from earlier," although last month the number was a bit higher.
Another BLS analyst, Ron Hettrick, told Market News International that the July average hourly earnings revision "was due to motor vehicles, where the original sample was down a lot and the new additional sample was down more in wages."
Hettrick added that July was a shutdown month in the industry where many workers took paid vacations and much overtime was paid.
"We don't project declines out, we just put a 50-50 guess on it," Hettrick said, implying that the BLS does not assume an entire category will fall if a particular component is falling.
In the manufacturing sector, Nardone cited seasonal patterns in the flip-flop as well, where a revised gain of 51,000 for July was followed by down 63,000 for August.
"In manufacturing again you have this issue of the seasonal. You want to look at two-month figures ... for two months the average is about 10,000 down a month and that compared to 36,000 in the first half of the year," Nardone said.
"It's probably useful to look at two months combined for the whole report," Nardone stressed.
Looking for interesting weakness, Nardone noted that construction jobs were down 29,000 in August, which he said "pretty much takes out the growth of last few months."
Expectations in a Market News International survey of economists had centered on an August non-farm payrolls gain of 215,000 and a rise in average hourly earnings of 0.3%. The forecast median for the unemployment rate came in at 4.2%, which was realized in the August report. |
