As expected, last month's one-time, outlier surge in leisure & hospitality, and education & health jobs was not only revised lower, but is fully gone in the month of August. Furthermore, while according to the original July report not a single category had lost jobs, that is no longer the case as the chart below shows, with what the DOL now admits were losses in government, construction, retail and information jobs.
So what happened in August? There were several notable observations: as SouthBay Research points out, the recent surge in Leisure and Hospitality jobs has hit a brick wall, barely growing in August, as consumer spending on recreational activities has peaked. Furthermore, low paid retail jobs continue to stagnate as the industry implodes, offset by a surprise rebound in mining and logging.
Another surprise observations was the completely fabricated and patently untrue jump of 13,000 jobs in auto payrolls. This ridiculous number will be promptly revised lower next month as it comes at time when GM and all other OEMs are either furloughing or slashing payrolls, as several companies have announced extended factory shutdowns. With the Harvey hit, we expect this weakness to persist in coming months.
Next, as Southbay also notes, Association & Membership Payrolls continue their surge: +13K in August. Curiously, this month saw greater enrollment in clubs than the entire year for almost every year since the recession ended, thus invalidating the credibility of the number.
There was a silver lining: while the pace of job creation slowed notably, the jobs added were of the higher paying variety:
- Professional Services (+39.9K): Strong white collar hiring (technical services +22K) offset rather limp temp worker hiring.
- Manufacturing (+36K): Driven entirely by the above-noted surprise jump in Auto payrolls boosted this sector
- Construction (+28K) Not surprising given continued robust real estate demand
- Health care (+20K) To be expected as the US population ages ever faster; big job increases for physicians (+7.5K) and hospital (+6.4K) hiring.
Curiously, the strongest job category of the "Obama recovery", waiters and bartenders, also known as "employment in food services and drinking places" was changed little in August, adding only 9,000 jobs in the past month, after a whopping increase of 53,000 in July as the US restaurant recession finally comes home to roost (and force a sharp slowdown in restaurant hiring). If this sector, which has contibuted the vast majority of marginal jobs over the past 5 years is in peril, the next recession has to be just around the corner.
But going back to the key problem area identified by SouthBay, we note that consumer spending has peaked:
- Leisure & Hospitality was flat (as expected). Restaurants were reporting sluggishness
- Retail was flat and that's a bad sign going forward. Combined clothing+ department store payrolls were flat - despite announced layoffs and store closures. That means these layoffs have are still in the pipeline and will be a drag on the next few months' payrolls.
Summarizing all of the above, here are two charts that breakdown job creation in July and August by key sector...
... and a more detailed breakdown from Bloomberg:
Keep in mind: none of the data above includes the effects from Hurricane Harvey, which according to estimates, is expected to wipe out at least 50-100K jobs from the September payrolls report.