Employment situation for August 2015

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Employment Situation

Released On 9/4/2015 8:30:00 AM For Aug, 2015 Prior Prior Revised Consensus Consensus Range Actual Nonfarm Payrolls - M/M change 215,000  245,000  223,000  173,000  to 257,000  173,000  Unemployment Rate - Level 5.3 % 5.3 % 5.2 % 5.2 % to 5.3 % 5.1 % Private Payrolls - M/M change 210,000  224,000  211,000  175,000  to 254,000  140,000  Participation Rate - level 62.6 % 62.6 % 62.6 % Average Hourly Earnings - M/M change 0.2 % 0.2 % 0.2 % 0.2 % to 0.4 % 0.3 % Av Workweek - All Employees 34.6 hrs 34.5 hrs 34.6 hrs 34.5 hrs to 34.6 hrs 34.6 hrs

Highlights The headline may not look it but there's plenty of strength in the August employment report. Nonfarm payrolls rose only 173,000 which is at the low-end estimate, but the two prior months are now revised up a total of 44,000. The unemployment rate fell 2 tenths to 5.1 percent which is below the low end estimate and the lowest of the recovery, since April 2008. And wages are strong, with average hourly earnings up 0.3 percent for a 2.2 percent year-on-year rate that's 1 tenth higher than July. Debate will definitely be lively at the September 17 FOMC! Private payroll growth proved very weak, at only 140,000. Government added 33,000 jobs vs July's 21,000. Manufacturing, held back by weak exports and trouble in energy equipment, shed a steep 17,000 jobs followed by a 9,000 loss for mining which is getting hit by low commodity prices. A plus is a 33,000 rise in professional & business services and a respectable 11,000 rise in the temporary help subcomponent. This subcomponent is considered a leading indicator for long-term labor demand. Retail rose 11,000 with vehicle dealers, who have been very busy, adding 2,000 jobs following July's gain of 11,000. The participation rate remains low, unchanged at 62.6 percent. Other details include a 1 tenth downtick in the broadly defined U-6 unemployment rate to 10.3 percent. The workweek rose to 34.6 from 34.5 hours. Seasonality, especially the timing of the beginning of the school year, always plays an outsized role in August employment data which are often revised higher. Policy makers are certain to take this into consideration at this month's FOMC. There's something for everybody in this report which won't likely settle expectations whether the Fed lifts off or not this month.

Recent History Of This Indicator The employment situation report for August is expected to show an incremental uptick with nonfarm payrolls expected to rise 223,000 vs 215,000 in July. The unemployment rate is expected to tick 1 tenth lower to an ever tighter 5.2 percent while average hourly earnings are expected to remain tame, at plus 0.2 percent. Note that the high-end nonfarm payroll forecast, at 257,000, isn't exceptionally strong and even if hit, might not be enough to raise expectations for a September rate hike.

Definition The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households (this is called the household survey). Workers are only counted once, no matter how many jobs they have, or whether they are only working part-time. In order to be counted as unemployed, one must be actively looking for work. Other commonly known figures from the Household Survey include the labor supply and discouraged workers.  Why Investors Care

During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month. Data Source: Haver Analytics

The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy. Data Source: Haver Analytics