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Wall Street to Your Street
Employers Add 156,000 New Jobs In August
September 8, 2017 | Mark Simenstad, Chief Investment Strategist
The unemployment rate inched back up from 4.3% to 4.4% in August, but still remains at a low level and is considered to be at or near full employment (Exhibit 1).
While recent surveys by the Philadelphia Federal Reserve have shown that businesses are interested in adding staff, finding qualified workers has become an obstacle to business growth – and may continue to be a problem in the months ahead. The addition of more than half a million new jobs the past three months is a positive sign for the economy because it indicates that businesses are motivated to add new workers despite the increasing difficulty of finding qualified applicants.
But while job growth has been good, wage growth was particularly weak in August. Wages grew a very disappointing $.03 over the previous month – and are up 2.5% over the past 12 months. Average hourly earnings for all employees on private nonfarm payrolls were $26.39 in August, with year-over-year average hourly wage growth of $.65, or 2.5% (Exhibit 2). Wages remain below pre-recession levels.
Initial jobless claims have remained at an extremely low level, with 236,000 claims the week ending August 24, according to the Department of Labor Unemployment Insurance Weekly Claims report (Exhibit 3). Jobless claims have remained under 300,000 for 130 consecutive weeks – the longest stretch since 1970.
In all, 1.95 million Americans are receiving unemployment benefits. That is little changed from last month and remains at about the lowest level since the mid-1970s. This is even more impressive considering the difference in the size of the labor force.
- The number of long-term unemployed (those jobless for 27 weeks or more) dipped slightly in August at 1.7 million and accounted for 24.7% of the unemployed (Exhibit 4).
- The number of persons employed part time for economic reasons, at 5.3 million, was unchanged (Exhibit 5).
- The labor force participation rate was unchanged in August at 62.9%. The employment-population ratio was down 0.1% in August at 60.1%. Both figures are little changed over the course of this year.
- The labor force participation rate for those in their prime working years (age 25-54) has remained steady at 81.6%, which is about 1.4% below the pre-recession level (Exhibit 6). That continues to be a weakness in the employment recovery.
- The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours in August (Exhibit 7).
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All information and representations herein are as of August 31, 2017, unless otherwise noted.
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