Despite slowing job growth of 173,000 in August, the U.S. unemployment rate edges down to 5.1 percent
Marking the smallest increase since March, the United States added 173,000 jobs in August according to the Bureau of Labor Statistics (BLS). Although this figure is low compared to monthly gains averaging 247,000 jobs per month over the past 12 months, August marks the 59th consecutive month of gains – the longest stretch on record.
August’s weaker than desired gains were also partially offset by upwardly revised June and July reports. According to the most recent data, the U.S. economy added 245,000 new jobs in both June and July, up from original reports of 231,000 and 215,000, respectively.
On another positive note, the U.S. unemployment rate decreased to its lowest level since April 2008 at 5.1 percent, and full-time employment reached a record high at 122,024,000 jobs nationwide.
Randstad's U.S. Employee Confidence Index (ECI)
Dropping from its all-time high of 62.3 in Q1 2015, Randstad’s U.S. Employee Confidence Index fell slightly to 61.9 in Q2 2015. However, the index remains well above its 59.0 reading in Q4 2014. More than half of workers (53%) say they are confident in their ability to find a new job.
U.S. Job Gains
U.S. employers added 173,000 new jobs in August, which marked the 59th consecutive month of job gains. Meanwhile, June and July employment reports were revised upward by a total of 44,000 jobs. Over the past 12 months, gains have averaged 247,000 per month.
U.S. Unemployment Rate
The U.S. unemployment rate fell from 5.3 percent in July to 5.1 percent in August. This marks the lowest jobless rate since April 2008 and is down to nearly half of the 10 percent unemployment peak in October 2009. The current rate is within the 5 percent to 5.2 percent range Federal Reserve officials view as the likely long-run average.
U.S. Unemployment Rate by Industry
In August, job gains occurred in healthcare (+41,000), social assistance (+16,000) and financial activities (+19,000), while employment in manufacturing (-17,000) and mining (-9,000) decreased.
August gains in healthcare account for roughly one-third of all new jobs created during the month, and overall employment in healthcare has risen by 457,000 over the year. Employment in financial activities also increased in August, and has risen by 170,000 over the year.
Employment in mining decreased by 9,000 jobs in August, and overall mining employment has decreased by 90,000 since its peak in December 2014. While manufacturing lost 17,000 jobs, overall employment in manufacturing has shown little net change over the past 12 months.
Temporary Help Services Sector
After a disappointing July, the temporary help services sector improved in August by adding 10,700 new jobs. The August report shows a 0.4 percent increase from July, and is up 4.3 percent from August 2014.
Average Weekly Earnings
Average hourly earnings rose by 8 cents to $25.09, marking a 2.2 percent increase from August 2014. The average workweek also increased by 0.1 hour to 34.6 hours.
While the headline number of August job gains may be disappointing at first glance, the overall outlook for workers is positive. Many economists believe the 173,000 new jobs added in August will be revised upward next month, which has occurred historically over the years. Additionally, full-time employment reached 122,024,000 in August marking a record high, and surpassing the previous peak of 121,875,000 in November 2007. Over the past 12 months, the unemployment rate has decreased by 1.0 percentage point, and the number of unemployed persons has decreased by 1.5 million.
The strong U.S. employment landscape, coupled with an increase in workers’ earnings, may give the Federal Reserve little reason not to continue with plans to raise interest rates. However, the economic situation in China and chaos in its financial markets may cause the Federal Reserve a bit more hesitation.