The Bureau of Labor Statistics reported that nonfarm payroll employment increased by 201,000 in August. Downward revisions of 50,000 to the prior two months’ data brought the three-month average gain to 185,000. Job gains were concentrated in a small number of sectors: professional and business services, construction, health care, wholesale trade, transportation and warehousing, and mining. After increasing for 12 consecutive months, manufacturing employment fell by 3,000 in August. Weakness in manufacturing also shows up in the index of hours, which declined in August; as well as a weakening manufacturing diffusion index, which indicates the percent of employers intending to add workers.
The unemployment rate remained at 3.9 percent, and the number of unemployed persons, at 6.2 million changed little. Among the major worker groups, the unemployment rates for adult men (3.5 percent), adult women (3.6 percent), teenagers (12.8 percent), Whites (3.4 percent), Blacks (6.3 percent), Asians (3.0 percent) and Hispanics (4.7 percent) showed little or no change in August.
Long-term unemployed—those jobless for 27 weeks or more—was little changed in August at 1.3 million and account for 21.5 percent of the unemployed. Over the year, the long-term unemployed has declined by 403,000. The number of persons employed part-time for economic reasons—referred also as involuntary part-time workers—stands at 4.4 million; relatively unchanged over the month, but down by 830,000 over the year.
Both labor force participation rate—at 62.7 percent, and the employment-population (EPOP) ratio—at 60.3 percent, declined by 0.2 percentage points in August. The 0.2 percentage point drop in EPOP showed up also for prime-age workers (age 25 to 54). For men, the year-over-year increase in EPOP is 1.1 percentage points, while for women it is 0.8 percent. For both men and women, EPOPs remain below pre-recession peaks and well below the peaks reached in 2000.
The most encouraging news in the report is evidence of a modest acceleration in wage growth. The average hourly wage increased by 2.9 percent over the last year. That compares to a 2.7 percent year-over-year rise in July. Though too early to assume a clear trend, the average of the last three months compared with the prior three months is slightly more rapid at 3.1 percent. Pay gains are not especially strong in areas where employers have been complaining of labor shortages. The average hourly wage in construction was up 3.3 percent over the past year, but the gain was 3.5 percent back in September 2016. Wages in manufacturing have risen by just 1.8 percent over the last year.
The overall picture in the August jobs report is overwhelmingly positive. The economy continues to generate jobs at a very healthy pace and there is some modest evidence that wage growth may be accelerating so that wages at least slightly outpace the rate of inflation.
The full press release on the August 2018 employment situation can be accessed in the pdf. below.
The next employment situation report for September 2018 is scheduled to be released on Friday, October 5, 2018.
The Bureau of Economic Analysis released its second estimate of second quarter 2018 Gross Domestic Product. The advance estimate is based on data that is subject to further revision compared to the third estimate. The second estimate shows that real GDP increased at an annual rate of 4.2 percent during the second quarter of 2018, showing 0.1 percent more growth than in the advanced estimate issued last month.
The increase in real GDP in the second quarter reflected upward revisions to nonresidential fixed investment and private inventory investment that were partly offset by a downward revision to personal consumption expenditures (PCE). Imports, which are a subtraction in the calculation of GDP, were revised down.
The full BEA press release on the second estimate of second quarter GDP can be accessed in the link below:
The next release - for the third estimate of second quarter GDP 2018 - will be released on September 27, 2018.
Today, Lisa Ventriss, President of Vermont Business Roundtable (VBR) and Jeffrey Carr, President, Economic & Policy Resources (EPR), announced the Q3 of 2018 outlook results of their joint initiative, the VBR/EPR Business Conditions Survey and Index. More than three-quarters of respondents (77%) shared negative outlooks specifically with ease of hiring for available positions; an increase from the previous survey (72%). Slightly less than half of responses expressed a neutral outlook about the state’s overall business climate (48%); a slight improvement from the previous survey (50%). However, expected demand and capital spending for the next three months deteriorated from the previous quarter (49% and 51% neutral, respectively).
Mr. Carr of EPR stated that “Despite last quarter’s increase in business confidence, responses once again appear to be trending back towards neutral. Business leaders remain understandably cautious regarding to the near-term outlook with all of the political volatility in Washington, and as they work through their own issues with a tightening supply of workers as the unemployment rate drifts even lower. In the absence of a long-term and steady supply of available workers with the skill sets they need, Vermont businesses appear to be indicating that they are finding it difficult to commit to larger, long-term expansions.”
Vermont’s outlook appears to remain on a “neutral” trend, with only slight fluctuation. Given the responses from this and the previous survey, they continue to demonstrate that economic conditions overall are stable but not immediately leading towards expansion in many areas of the State and sectors of Vermont economy.”
According to the Bureau of Labor Statistics, the Consumer Price Index for all urban consumers (CPI-U) increased 0.2 percent in July of 2018 on a seasonally-adjusted basis. An increase in the index for shelter was the main contributor to the monthly increase.
Excluding the volatile costs of food and energy, the index for all items less food and energy rose by 0.2 percent in July. The indexes for used cars and trucks, airline fares, new vehicles, household furnishings and operations, and recreation all increased in July.
The all items index has risen 2.9 percent over the last 12 months ending in July, the same as for June 2018.
The full press release can be found via the link below.
Next release is Thursday, September 13, 2018, for the August 2018 Consumer Price Index.
The Bureau of Labor Statistics reported the economy added 157,000 jobs in July. With upward revisions to the data from the prior two months, the average gain over the last three months was 224,000. The leading sector for job gains in July was professional and business services, which increased by 51,000 in July and have added 518,000 over the year. The other leading sector is manufacturing, which added 37,000 jobs—all but 5,000 of which were in durable goods manufacturing. Employment in manufacturing is up by 327,000 over the last year, an increase of 2.6 percent. Other sectors adding employment in July are health care and social assistance (+34,000); food services and drinking places (+26,000); construction (+19,000); and retail trade (+7,000). Employment showed little or no change over the month in other major sectors, including mining, wholesale trade, transportation and warehousing, information, financial services, and government.
The unemployment rate edged down to 3.9 percent as most of the rise in unemployment in June—which was due to increased labor force participation—was reversed. The labor force participation rate—at 62.9 percent in July, was unchanged over the month. The employment-population (EPOP) ratio rose to 60.5 percent, a new high for the recovery.
The number of unemployed persons declined by 284,000 to 6.3 million in July. Both measures were down over the year, by 0.4 percentage points and 676,000 respectively. Among the major worker groups, the unemployment rates for adult men (3.4 percent) and Whites (3.4 percent) declined in July. The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), Blacks (6.6 percent), Asians (3.1 percent), and Hispanics (4.5 percent) showed little or no change over the month.
Among the unemployed, the number of reentrants to the labor force decreased by 287,000 in July to 1.8 million, following an increase in June. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.) Long-term unemployed—those jobless for 27 weeks or more) was essentially unchanged at 1.4 million in July and accounted for 22.7 percent of the unemployed.
The number of persons employed part time for economic reasons (called involuntary part-time workers) was little changed in July, at 4.6 million; down by 669,000 over the year. These persons, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full time jobs.
In spite of the healthy pace of job growth and the low unemployment rate, there continues to be little evidence of accelerating wage growth. Over the last year, the average hourly wage has risen by 2.7 percent. There is a small uptick to 2.87 percent if wage growth over the last three months (May, June and July) are annualized compared with the prior three months (February, March and April).
The full BLS press release on the July 2018 employment situation can be accessed in the link below:
The next employment situation report for August is scheduled to be released on Friday, September 7, 2018.