In what many analysts consider a temporary dip in growth, the nation added 142,000 new jobs to the economy in August compared to the average monthly gain of 212,000 over the prior 12 months. Additionally, the Labor Department decreased employment gains for July and June by a combined 28,000 jobs, and the unemployment rate fell slightly to 6.1 percent to match a six-year low.
The labor force participation rate dipped to 62.8 percent from 62.9 percent to tie a 36-year low.
The majority of job growth occurred in both the professional and business services sector and the health care arena. Professional and business services added 47,000 jobs in August, generating a total of 639,000 new jobs over the past year.
Within this sector, administrative and support services employment continued to trend up, with the addition of 23,000 jobs. Architectural and engineering services and management and technical consulting services both added 3,000 jobs, respectively.
Health care added 34,000 new jobs in August, including social assistance employment, which added 9,000 jobs and has expanded by a total of 104,000 new positions over the year. Offices of physicians and hospitals added 8,000 jobs and 7,000 jobs, respectively. Construction also performed well in August, adding 20,000 new jobs, which is in line with this sector’s average monthly job gain of 18,000 new hires over the prior 12 months.
U.S. Manufacturing Grows at Fastest Pace in Three Years
A bright spot in August’s employment picture was the expansion of U.S. manufacturing activity, led by a surge in orders for plastics and metals that powered the U.S economy through the global slowdown.
The latest Institute for Supply Management (ISM) index climbed unexpectedly from 57.1 in July to 59 in August, which represents the index’s highest level since March 2011. In August the numbers that gauge orders were also the strongest in a decade, according to the ISM.
Many economists anticipated the improved manufacturing sector reports based on recent increased demand for workers, which translates into more consumer spending. For example, American factories are seeing a rebound in auto sales and stronger business spending on new plans and equipment.
Students’ Return to College Dampened by Outlook
As millions of students returned to college recently, a new Federal Reserve Bank of New York study casts a shadow on their job outlook post-graduation. Although demand for college graduates rebounded after the Great Recession, it has leveled off over the past 18 months according to the report. However it’s important to note this doesn’t mean recent graduates aren’t landing jobs. In fact, this group’s unemployment rate has fallen to just over 5 percent, down from a high of more than 7 percent in 2011. More importantly, college graduates’ unemployment rate is less than half the rate of young workers who don’t have a bachelor’s degree.
But the report does indicate that many recent graduates are underemployed and working in jobs that don’t require degrees. The underemployment rate has risen since 2003 and now stands at 46 percent. Although federal researchers did not examine why the demand for college-educated workers is stalling, they did say this trend doesn’t mean getting a college degree isn’t valuable. For example, the value of a bachelor’s degree is near an all-time high, averaging $275,000 in extra wages earned during 40 years of work as compared to earnings of workers without a degree.
Four Overlooked Trends in Employment Market
While the spotlight often falls on the monthly employment numbers, several other trends demand a second look as well:
- More people are on U.S. company payrolls today than at any other time in U.S. history, with 139 million U.S. workers receiving payroll wages.
- About one-third of U.S. workers are categorized as contingent or freelance. A recent survey commissioned by the Freelancers Union and Elance-oDesk reports that 53 million freelancers (including independent contractors, temporary workers and moonlighters) make up 34 percent of the U.S. workforce.
- About one-in-seven 16 to 24-year-olds is neither working nor in school according to a Social Science Research Council report from late 2013. However the BLS said this group’s July unemployment rate at 13.6 percent was the lowest since the recession started.
- More than 70 million Baby Boomers will retire before 2030, according to the Social Security Administration. And Georgetown University says their departure from the workforce will help boost job openings by upwards of 30 million by 2020.
Employee and Consumer Confidence Soar
After two months of record-breaking confidence levels among employees, the August Randstad U.S. Employee Confidence Index fell to 55.9, declining 3.2 points from 59.1 last month. The Randstad macroeconomic confidence index also fell to 44.9 from 49.2 in July. The study is conducted online by Harris Poll on behalf of Randstad, among 1,043 employed U.S. adults ages 18 and older.
In August, workers indicated less confidence in the strength of the economy, with only 27 percent believing it is getting stronger as compared to 35 percent in July. However, workers’ confidence levels regarding their current employment situation remain high. The clear majority (74 percent) believe it is not likely they will lose their job in the next 12 months, and 61 percent of employees are confident in the future of their current employer. More than half (53 percent) of workers say it is not likely they will look for another job in the next year.
The Conference Board’s Consumer Confidence Index increased again in August and now stands at 92.4, up from 90.3 in July. This is the fourth consecutive monthly increase and the best reading since October 2007. The survey does indicate, however, that consumers were marginally less optimistic in August than in July about the short-term outlook of various business and labor-related issues, primarily because of concern about their earnings.