August jobs growth tops expectations, but unemployment holds near 18-year low

Andrew Cummings
September 10, 2018

Job growth remained steady last month, and the economy has now added jobs for 95 consecutive months. They increased payrolls by 18,000 jobs in July. Still, monthly gains for the year are averaging a robust 207,000. The unemployment rate remained unchanged at a very low 3.9 percent.

Even while reporting a robust job gain for August, the Labor Department revised sharply down its estimate of hiring in June and July.

August's job gains were driven by professional and business services as well as health care and wholesale trade.

Jason Mazzarone, chief executive of SoBol, a restaurant chain that sells a variety of acai bowls, says he is paying workers more, mostly because of higher minimum wage laws in NY and other states where his 26-store chain operates.

Job gains in August were nearly across all sectors, though manufacturing payrolls fell by 3,000. The U-6, or underemployment rate, fell to 7.4% from 7.5%. June's gain was lowered from 248,000 to 208,000 and July's from 157,000 to 147,000.

The bigger than expected wage numbers may weigh on the stock market Friday as investors are likely to think it will encourage the Federal Reserve to increase the pace of interest rate hikes US stock index futures fell in pre-market trading Friday morning after the release of the jobs report.

In August, factories expanded at their quickest pace in 14 years, according to a survey of purchasing managers.

In terms of the larger context, this morning's data points to 1.65 million jobs created so far in 2018, which is quite good, and which is an improvement on the totals from the first eight months of 2016 (1.59 million) and 2017 (1.51 million).

Across all sectors besides management occupations, installation, maintenance and fix workers had the lowest unemployment rate, at 2.5%. Here, a job seeker holds an employment flier during a hiring event at an Aldi Supermarket in Darien, Ill., in July. The year-over-year increase was 2.8 percent in July of 2016.

USA businesses added 204,000 jobs while federal, state and local governments lost 3,000. "We think we are at that stage where the labor market has gotten so tight that you're going to see upward pressure on wages". That gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.

Wages grew at 2.9 percent in the past year, the best growth since 2009 and an encouraging sign that wages might finally be moving higher after years of sluggish gains.

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