Jobs Growth Slows Modestly in August

Economic Blog
September 06, 2019

August’s jobs report was weaker than expected, showing that corporate hiring has slowed a bit recently.

Nonfarm payrolls rose 130,000 in August, below consensus expectations for a 164,000 gain despite a 25,000 bump from temporary jobs related to the 2020 Census. As shown in the LPL Chart of the Day, Jobs Growth Slows in August, July’s job increase was also revised down to 159,000, pulling the 12-month average payroll change down to a still-solid 173,000.

 

We still see tailwinds for the U.S. labor market, though. Payrolls are still growing at an above-average trend for the cycle (when looking at the 12-month trend), and initial jobless claims have hovered near cycle lows for months now.

“The recent slowdown in hiring has been disappointing,” said LPL Financial Chief Investment Strategist John Lynch. “But, unemployment claims are low and wages are still rising at a healthy clip, supporting consumption.”

Corporate fundamentals also look solid, and the Federal Reserve has committed to flexibility in monetary policy in case global weakness continues to impact the U.S. economy. Data currently shows U.S. businesses are putting expansion plans on hold because of trade uncertainty, so a U.S.-China trade resolution could aid corporate sentiment over the long term.

Other details in the August jobs report were more encouraging. Average hourly earnings rose 3.2% year over year in August, near the highest pace of growth in this expansion. Global deflationary concerns have been rampant recently, but U.S. wage growth has remained solid, showing us that domestic inflationary pressures should remain healthy. The average work week climbed to 34.4 hours after dropping to a 22-month low in July.

IMPORTANT DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This Research material was prepared by LPL Financial, LLC.

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (Member FINRA/SIPC).  Insurance products are offered through LPL or its licensed affiliates.  To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL is not an affiliate of and makes no representation with respect to such entity.

If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:

Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank/Credit Union Deposit

Member FINRA /SIPC

For Public Use | Tracking # 1-890725