Jobs Preview

This Friday the monthly employment report for August will be released. With many looking at the potential for a September rate hike, this report will be heavily watched for clues as to when the Federal Reserve (Fed) might next raise rates. According to our Chief Economist John Canally, “Job growth naturally starts to slow down at this point in the economic cycle. We would need a solid number to keep a September rate hike in play, but Fed officials have commented that a slowdown to even 120,000 jobs created per month over the medium term would likely be enough to tighten labor markets.”

Here are some stats to chew on before the big day on Friday.

  • Expectations are for 180,000 jobs created in August, which would be beneath the 255,000 created in July and 292,000 in June, but would be well above the huge miss in May (24,000 jobs created).
  • August has created jobs for five straight years and hasn’t hit six in a row for 20 years.
  • No month has created fewer jobs per month the past 25 years than August at less than 86,000 a month.

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  • Jobs have been created for a record 70 straight months. It reached 46 right before the Great Recession and the previous record was 48, which ended in July 1990.

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  • The 12-month average of jobs growth has been above 200,000 for 27 straight months for only the seventh time since 1939. The last time it got this far was a 53-month streak that ended in October 2000.
  • The unemployment rate has been beneath 5% for three straight months for the first time since a streak of 24 straight months that ended in late 2007.

In conclusion, all economic reports are important, but some are more important than others and the employment report is always one of the month’s highlights. Last week at the Fed’s conference in Jackson Hole, Wyoming, Fed Chair Janet Yellen left the door wide open for a potential September rate hike. If the jobs number this Friday comes in weak, a September hike is probably off the table. Of course, if the number is strong, then the chance for the second rate hike in nearly 10 years heats up.

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