Ugly Jobs Report: August Payrolls Miss, Slide To 156K; Hourly Earnings Also Disappoint

We warned readers yesterday to "Prepare For Disappointment" with today's jobs report, and sure enough that's precisely what we got when moments ago the BLS reported that in August just 156K jobs were created, a big miss to the 180K expected, and following a sharp downward revision to June and July, which were revised to 210K and 189K, respectively, a 41K drop combined.

But don't worry, the worse, the better as the more disappointing the economic data, the less likely the Fed will hike in September, December, or ever for that matter. And keep in mind, today's data did not include the Harvey devastation, which will assure no rate hikes from the Fed for months, if not decades to come.

Not helping matters - for the economy, if not the stock market which now once again loves bad data - was the Household Survey, according to which the number of employed Americans declined by 74,000 to 153,439K. On an annual basis, the increase in the employment level dropped to 1.2%, the lowest since March.

The unemployment rate also disappointed, rising from 4.3% to 4.4%, while the avg hourly earnings missed, increasing by 2.5% Y/Y in August, below the 2.6% estimate and the same as July.

The sequential increase in earnings was just 0.1%, also below the 0.2% expected, and far below the 0.3% in July. Furthermore, since average weekly hours declined also, from 34.5 to 34.4, average weekly earnings declined outright from $909.42 to $907.82 in August. Furthermore, average weekly earnings rose just 2.2% Y/Y, the lowest rate of increase since January.

While the labor force participation rate remained unchanged at 62.9%, the number of Americans not in the labor force increased once again, growing by 128K in August to 94.785 million.

More details from the report:

Total nonfarm payroll employment increased by 156,000 in August. Job gains occurred in manufacturing, construction, professional and technical services, health care, and mining. Employment growth has averaged 176,000 per month thus far this year, about in line with the average monthly gain of 187,000 in 2016.

Ironically, manufacturing employment somehow rose by 36,000 in August, with Job gains allegedly occuring in motor vehicles and parts (+14,000) - at a time when virtually every car factory was furloughing workers, as well as fabricated metal products (+5,000), and computer and electronic products (+4,000). Manufacturing has added 155,000 jobs since a recent employment low in November 2016.

In August, construction employment rose by 28,000, after showing little change over the prior 5 months. Employment among residential specialty trade contractors edged up by 12,000 over the month.

Employment in professional and technical services continued to trend up in August (+22,000) and has grown by 262,000 over the last 12 months. In August, job gains occurred in computer systems design and related services (+8,000).

Health care employment continued on an upward trend over the month (+20,000) and has risen by 328,000 over the year. Employment in hospitals edged up over the month (+6,000).

Mining continued to add jobs in August (+7,000), with all of the growth in support activities for mining. Since a recent low in October 2016, employment in mining has risen by 62,000, or 10 percent.

Jobs were also weaker for waiters and bartenders, aka "employment in food services and drinking places" which changed little in August (+9,000), following an increase of 53,000 in July. Over the year, the industry has added 283,000 jobs.

The average workweek for all employees on private nonfarm payrolls declined by 0.1 hour to 34.4 hours in August. In manufacturing, the workweek declined by 0.2 hour to 40.7 hours, while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.7 hours for the fifth consecutive month.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $26.39, after rising by 9 cents in July. Over the past 12 months, average hourly earnings have increased by 65 cents, or 2.5 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $22.12.

The change in total nonfarm payroll employment for June was revised down from +231,000 to +210,000, and the change for July was revised down from +209,000 to +189,000. With these revisions, employment gains in June and July combined were 41,000 less than previously reported. After revisions, job gains have averaged 185,000 per month over the past 3 months.

Finally, for those wondering, here is the answer: "Hurricane Harvey had no discernable effect on the employment and unemployment data for August."


Justin Case eclectic syncretist Fri, 09/01/2017 - 10:06 Permalink

During times of uncertainty, such as the prelude to the Brexit vote, investors tend to gravitate toward the Japanese yen. This causes the yen to appreciate and has led to the common perception of the yen as a safe-haven currency.This strengthening of the Japanese currency during periods of risk aversion has become so repetitive and ingrained that it is rarely questioned. But why is it that global investors flock to the currency of the world’s most indebted nation whenever trouble arises?The yen’s role as a safe-haven currency has been well documented. Aside from the many white papers and research studies demonstrating that conclusion, a quick review of recent events shows this to be the case.You may also like Safes Sold Out in Japan: Customers Hoard Cash in Response to Negative RatesDuring the financial crisis and its aftermath, the yen appreciated by more than 20 percent. Later, in 2010, worries about peripheral European debt led to a 10 percent appreciation against the euro. A similar phenomenon occurred again in 2013 when uncertainty around Italian elections caused the yen to rise over 5% against the euro and 4% against the dollar … in a single day.Even when Japan was leveled by the Great East Japan earthquake in 2011, the currency somehow managed to rise.

In reply to by eclectic syncretist

NickyGall Fri, 09/01/2017 - 08:37 Permalink

Here is an article that explains the one key reason why the economy has been so slow to recover from the job losses of the Great Recession:
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In so many ways, it is easy to see why the post-Great Recession improvement in employment has had a very variable impact on American workers and why this recovery feels so different than other post-recessional economic expansions.

ejmoosa NickyGall Fri, 09/01/2017 - 08:53 Permalink

What about another reason?Profit growth for all corporations in the US over the last ten years is 3.82%, a historically low number.The numbers for the last 5 and three years are even weaker, confirming a continuous downward trend in profits.WHy would companies hire when the are not making more profit?

In reply to by NickyGall

swmnguy ejmoosa Fri, 09/01/2017 - 09:16 Permalink

You've gotten to the heart of it all.  Businesses are not charities.  Employers only hire employees when by so doing, they can make more profit by producing more goods and services to sell.  When the market is not there, they won't hire more employees.  It's as simple as that.This is why the rehashed trickle-down bullshit of tax cuts for corporations and the wealthy is so pernicious and false.  Costs, including costs of employment, are subtracted from revenues to determine profits, and then profits are taxed.  A tax cut does nothing to improve the market for goods and services.  No business in the history of employment has ever hired an employee because they had extra money to spend.The problem is that, as has been long predicted and observed, our system of finance based on debt has fatal flaws due to internal contradictions.  There have to be infinite and expanding supplies of resources, energy, markets and money to make it work.  There has to be inflation at roughly the same rate as interest rates on loans.  People and businesses have to take out loans at interest in order to create new money.  Interest and fees and the carrying costs of Finance take up an ever-increasing proportion of every transaction, acting as sand in the gears of the economy.  Unless the system is re-set periodically, and bad debt that will not be repaid is expunged, the system grinds itself to a halt.  That's what we've been seeing develop for the past 40 years.The entertaining thing will be to see how the President responds. Will he call his own Administration's numbers fake?  Will he retroactiively disown prior months' revised data that he's praised himself for so lavishly?  Or is this also Obama's fault, where prior months' since-revised numbers were to Trump's credit?  I'm starting to wonder if Trump and his apologists like Huckabee-Sanders and Conway have had their inner-ear canals removed somehow.  Normal people spinning so much would be rendered seasick and immobile. 

In reply to by ejmoosa

Justin Case ejmoosa Fri, 09/01/2017 - 10:25 Permalink

The numbers for the last 5 and three years are even weakerYes but companies like IBM borrowed big money to buy back their shares. Even though they were making less money the bonuses to the excutives increased. Why? Their bonus uses earnings per share. Less shares to divide earnings. Awesome earnings and bonuses. Merica lacks investment in productivity and has fallen behind. It's all financial engineering, also known as smoke and mirrors.The empire has been in decline for 20 yrs. Buying time with borrowing, interest rates, social programs, woars, industries moving to China smothered with MSM bullshit and distractions, like vote rigging by Russia, China stealing jobs, NK will blow up the world, Brexit will destroy the world economy, false flags, middle east perpetual woars, economic woar on Venezuela, as the bow of the ship takes on water.

In reply to by ejmoosa

spastic_colon Fri, 09/01/2017 - 08:40 Permalink

did anyone actually think it would NOT be a miss with the taper talk etc etc..........?? i mean it is sept and the 1st of the month on a holiday friday no less.....this was just the potion needed to keep the baffle recorder stocks coming right up!

swmnguy 1stepcloser Fri, 09/01/2017 - 09:32 Permalink

That is, of course, the point of EBT.  When people have to queue up in soup lines, they start to notice how many of them there are, and how powerful they could be.  Therefore we isolate them and keep them separated from one another, isolated, and alienated, and set against one another.  It's worked very well for a long time.  People are able to see that the real economy is collapsing and creating poverty, and yet still call those being crushed and impoverished as "gibsmedats" and at fault for the failings of the economy.  That way the looters and Oligarchs walk free with their takings.  It works very well indeed.

In reply to by 1stepcloser

The Ram Fri, 09/01/2017 - 08:44 Permalink

So, since everything seems to be trending down, stocks should really blast off today!!  Ah, the beauty of the inverse market.  If the war in korea goes hot, we can really see a moonshot in stocks.  Logic does prevail.  Sarc off.

taketheredpill Fri, 09/01/2017 - 08:50 Permalink

  BULLISH?Last few years:Weak Data - Buy Equities because Fed will step inStrong Data - Buy Equities because economy is StrongNow:Weak Data - Buy Equities because Fed will Stop Quantitative TighteningStrong Data - Sell Equities because Fed will Do Quantitative Tightening

Overleveraged_… Fri, 09/01/2017 - 08:50 Permalink

The only thing better for markets than a good jobs report is a Bad one!!! Go Long, 3x Leveraged S&P 500. Folks the water is warm and we are heading straight to 3000 by year end.Yellen/Cohn will continue to keep rates lower for longer, and will not wind down capital injections until Q2 2019. This means that we will not see a hint of slowing down until at LEAST late 2019.My chips are ALL IN.