August 2024 Jobs Report: Jobs Growth Slows Further
Unemployment Shifts to 4.2%
Jobs Growth
Maintaining a recent slowing trend, the month of August saw the creation of 142,000 new jobs. This was in line with average job growth in recent months but below the average monthly gain of 202,000 over the prior 12 months. It followed downward revisions of the prior two months totaling 86,000 (from 114,000 in July to 89,000 and from 179,000 in June to 118,000).
Top Industries
Hiring activity continued in August in both healthcare and construction, while employment in manufacturing edged down in August.
Unemployment
The unemployment rate saw little movement in the past month but did shift down from 4.3% in July to 4.2% in August.
Wages
Average hourly earnings increased 0.4% in August, moving the gain over the past 12-month period to 3.8%.
Work Week
The average work week added 0.1 hour in August, reaching 34.3 hours.
Temporary Job Trends
Significantly shrinking from the larger losses the sector experienced in recent months, there were 2,900 fewer temporary jobs in August.
What Does It All Mean?
True to form, the latest monthly numbers on jobs creation failed to match expectations. As has happened frequently, actual reported data was lower than most economists had estimated. How closely hiring activity matches the betting pool is nowhere near as relevant as whether actual activity signals a strong economy. Optimists insist that 142,000 new jobs for the month is a solid number; pessimists wish it were far higher. What else does this latest snapshot of the labor market offer?
The economy continues to add new jobs, with a solid topline number, a fairly steady rate of unemployment and continuing wage growth. However, most sectors report little change in jobs growth month-over-month, and a few show signs of weakening demand, which is troubling. Another wrinkle in the outlook is the fact that monthly numbers are usually adjusted, often in a negative way. Of note, a recent Labor Department report indicated that over 12 months (from March 2023 to March 2024), hiring activity was overstated by more than 800,000 jobs. That is significant.
The most definitive statement that can be made about the labor market is that it continues to grow, albeit at a less-than-breakneck pace. So while it appears that the labor market is definitely cooling, a slowing economy offers a much stronger probability for interest rate cuts to spur growth.
Employers can take advantage of the opportunities presented by a less frenetic hiring landscape. Any pause allows for careful thinking about the best ways to sync workforce planning with business strategy. A less competitive labor market also offers more time to reflect on what each candidate can contribute to the organization. Both lead to better hires.
Sources: U.S. Bureau of Labor Statistics, Staffing Industry Analysts, CBS, CNN, CNBC, The New York Times, The Wall Street Journal, Forbes, The Washington Post.