The August Employment Situation
The August employment report is out this morning. The United States unemployment rate rose slightly from 9.5 to 9.6 percent, driven more by labor force gains than employment losses. The non-farm job losses occurred in the public sector, the largest component of which was likely related to the Census wind-down. The bulk of the Census wind-down is probably over. The long-term unemployed subsided from 6.6 million to 6.2 million, a welcome improvement but 6.2 million long-term unemployed puts a damper on expected household expenditures.
Non-farm jobs fell 54 thousand, driven by a gain of 67 thousand private sector gains and 121 thousand public sector losses. These were close to what we projected last month of private sector gains of 80 thousand and public sector losses of 120 thousand.
Where do we go from here? Federal government job numbers should not change as much in the next couple of months as we are past the wind-up and wind-down of the Census effort. I would think that state and local government job gains would be weak in the coming months as weak revenue streams interact with balanced-budget requirements to imply slow hiring. Therefore we may see positive overall non-farm job growth next month, but not strongly positive, I would project about 30 thousand jobs.
The unemployment rate will likely not move much, but if it does it will likely be due to a change in labor force that dominates jobs. Calling next month’s labor force is difficult. It is clear that there are folks out there who need a job and are willing to enter the labor force to search for one. However, at the same time, this is not a good labor market in which to look for a job.