August “Noise” Falls Short of Expectations
But many jobs go begging.
Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics
The U.S. added another 156,000 jobs in August, below the expected gains of about 180,000. Unemployment ticked up to 4.4 percent and the broader measure of labor underutilization, which includes all individuals not formally included in the narrow definition of “unemployed” but available for full-time work, remained steady at 8.6 percent. Manufacturing, construction, business services, health services and mining all showed decent job gains and all the other sectors were essentially flat.
Moreover, job openings in the U.S. are at record levels: over six million reported open positions. Counter that with slightly more than seven million unemployed workers. The mismatch centers on the skills that are required by the open jobs and where the jobs are located. It is an increasingly critical condition of our labor market; the appropriately skilled worker shortage is getting more problematic.
Which brings us to the subject of wages, or “hourly earnings,” which continue to rise at a restrained rate of 2.5 percent over the last year. Even those marginal increases have not been widespread, but it is hard to see how employers are going to cope with increasingly tight labor markets without increasing wages.
It would have been nice to see some stronger numbers for August, but these aren’t damaging and can be thought of as the result of a surprisingly strong July. That is, labor market conditions continue on what is now an extended path of improvement, and this month’s marginal weakness can be attributed to simple statistical noise. Given that last quarter’s GDP growth was revised up last week with upward revisions to consumption, the noise explanation seems likely.
About the Author
Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development of the MST Virtual Economist and is the MST Advisory economics specialist.
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