While there were almost no redeeming qualities to today's payrolls report, which was a 4-sigma miss to expectations and which at 235K came in below the lowest Wall Street forecast of 400K, one look at the internals does give some hope that the ugly picture painted by the August report may be a one-time event.
First and foremost, after progressively rising every month since February and not printing negative once in 2021, the number of waiters and bartenders (i.e., "employees in food service and drinking places"), dropped by 41,500 in August, the biggest - and only - drop in this series since December.
To get a sense of how rare it is to have a down month in this job category consider that in the decade since 2010 and culminating with the March 2020 crash which nuked most jobs, there had been just 6 months with job losses.
More remarkably, the Leisure and Hospitality group - of which Waiters and Bartenders is a key subcomponent - was flat in August after rising by 400K in the previous two months and after having added 2.1 million jobs since February.
Another notable observation about the August jobs comes from Indeed chief economist Jed Kolko who pointed out that in high work-from-home sectors, employment was finally back above pre-pandemic levels in August, while it was the medium and low WFH sectors that were more affected by the virus and stalled in August.
In other words, this at least superficially validates the theory that the Delta restrictions and lockdowns were a big driver behind the August weakness (of course, there were many more and more fundamental economic ones, but for soundbite purposes expect the media to focus on Delta as the biggest culprit).
As Bloomberg Intel's Riccadonna note, it’s not particularly surprising to see sectors vulnerable to social distancing, such as leisure and hospitality, react strongly to the delta variant, but the critical economic signal comes from “less vulnerable sectors.” In this case, payrolls excluding both leisure/hospitality and the unusually volatile local education sector, showed a still-robust 241,000 increase in August.
“Nonetheless, it poses questions about economic momentum considering that it was running above 400,000 in the prior two months,” he says. “To be sure, the sharp payroll downshift is not a sign of economic stall, but it certainly conveys a signal of less momentum relative to the first half of the year.”
Another reason for the steep slowdown in August is that after government jobs added a massive 255K in July - the second highest on record amid a surge in public school teachers - in August this category actually shrank by 8K as teachers (especially the unionized kind) opted to stay home and perfect their Antifa pitch instead of actually teaching kinds.
These two categories aside, here is a snapshot look at other job categories.
- Employment in professional and business services increased by 74,000 in August. Employment rose in architectural and engineering services (+19,000), computer systems design and related services (+10,000), scientific research and development services (+7,000), and office administrative services (+6,000). Since February 2020, employment in professional and business services is down by 468,000, over half of which is in temporary help services (-262,000).
- Transportation and warehousing added 53,000 jobs in August, bringing employment in the industry slightly above (+22,000) its pre-pandemic level in February 2020. Employment gains have been led by strong growth in couriers and messengers and in warehousing and storage, which added 20,000 jobs each in August. Air transportation also added jobs (+11,000), while transit and ground passenger transportation--which includes school buses--lost jobs (-8,000).
- In August, employment increased by 40,000 in private education, declined by 21,000 in state government education, and changed little in local government education (-6,000). In all three industries, these employment changes followed job gains in June and July. August marks the beginning of the traditional back-to-school season. However, recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns. Since February 2020, employment is down by 159,000 in private education, by 186,000 in state government education, and by 220,000 in local government education.
- Manufacturing added 37,000 jobs in August, with gains in motor vehicles and parts (+24,000) and fabricated metal products (+7,000). Employment in manufacturing is down by 378,000 from its pre-pandemic level in February 2020.
- The other services industry added 37,000 jobs in August, but employment is 189,000 lower than in February 2020. In August, employment rose in personal and laundry services (+19,000) and in repair and maintenance (+9,000).
- Employment in information increased by 17,000 in August, reflecting a gain in data processing, hosting, and related services (+12,000). Employment in information is down by 150,000 since February 2020.
- Employment in financial activities rose by 16,000 over the month, with most of the gain occurring in real estate (+11,000). Employment in financial activities is down by 29,000 since February 2020.
- Mining added 6,000 jobs in August, reflecting a gain in support activities for mining (+4,000). Mining employment has risen by 55,000 since a trough in August 2020 but is 96,000 below a peak in January 2019.
- Employment in retail trade declined by 29,000 in August, with losses in food and beverage stores (-23,000) and in building material and garden supply stores (-13,000). Retail trade employment is down by 285,000 since February 2020.
- In August, employment in leisure and hospitality was unchanged, after increasing by an average of 350,000 per month over the prior 6 months. In August, a job gain in arts, entertainment, and recreation (+36,000) was more than offset by a loss in food services and drinking places (-42,000). Employment in leisure and hospitality is down by 1.7 million, or 10.0 percent, since February 2020.
Finally, courtesy of Bloomberg, here are the industries with the highest and lowest rates of employment growth for the most recent month. Additionally, monthly growth rates are shown for the prior year. The latest month’s figures are highlighted.