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Economy in Brief

U.S. Payrolls Rise Broadly in August; Earnings Gain Falls; Jobless Rate Increases
by Tom Moeller  September 2, 2022

• Payroll employment rises by 315,000 workers.

• Monthly wage gain is slowest in four months.

• Unemployment rate moves up to 3.7%.

Nonfarm payrolls increased 315,000 (3.8% y/y) during August following a 526,000 July rise, revised from 528,000. Payrolls rose 293,000 in June, revised from 398,000. Expectations had been for a 300,000 rise in the Action Economics Forecast Survey. On average, payrolls have risen 438,000 each month during 2022 versus a 562,000 average in 2021.

Average hourly earnings rose 0.3%, after increasing an unrevised 0.5% in July and 0.4% in each of the prior two months. The 5.2% y/y gain was up from 4.9% growth last year. A 0.4% monthly increase had been expected.

The unemployment rate, measured in the household survey, rose to 3.7% in August from 3.5% in July. It was the highest rate in six months. An unchanged 3.5% rate had been expected. Household employment rose 442,000 following a 179,000 July increase. The labor force rebounded 786,000 after falling 63,000 in July. The overall unemployment rate, including workers who are marginally attached & part-time for economic reasons, increased to 7.0%, up from 6.7% in each of the prior two months.

In the establishment survey, job gains remained broad-based, but below those in July. Factory sector employment rose 22,000 last month (3.7% y/y) following a 36,000 July increase. Construction sector employment improved 16,000 (4.0% y/y) after increasing 24,000 in July. Mining & logging employment rose 7,000 (11.7% y/y), about the same as in the prior four months.

Private service-producing sector employment increased 263,000 in August (4.5% y/y) after strengthening 411,000 in July. Lessened m/m gains were logged in almost every service category. Education & health care jobs rose 68,000 (3.3% y/y) after surging 118,000 in July. Professional & business services jobs also gained 68,000 (5.0% y/y) after an 84,000 increase. That included an 11,600 rise (7.5% y/y) in temporary help employment. Employment in trade, transportation & utilities rose 65,000 (3.6% y/y) as retail jobs increased 44,000 (2.6% y/y). Leisure & hospitality employment gained 31,000 (8.4% y/y) following a 95,000 increase. Information sector employment rose 7,000 (5.9% y/y) after increasing 16,000 in July. Financial sector employment improved 17,000 (2.2% y/y) on the heels of a 13,000 rise.

Government sector payrolls increased 7,000 last month (0.5% y/y) after strengthening 49,000 in July. Federal government payrolls fell 2,000 (+0.5% y/y) last month after gaining 9,000 in July. State government employment rose 3,000 (0.5% y/y) after improving 10,000 while local government jobs gained 6,000 (0.8% y/y) after surging 30,000 in July.

Private-sector average hourly earnings rose 0.3% in August after a 0.5% July gain. The 5.2% y/y increase was slightly below the 5.6% March peak. Earnings in the goods-producing sector rose 0.1% after a 0.4% gain. The 4.4% y/y rise was below the 5.2% y/y March high. Earnings in construction rose a lessened 5.3% y/y followed by a 3.7% y/y gain in the factory sector which was below 5.2% January peak. In the private services-producing sectors, earnings rose 0.3% (5.4% y/y) following two months of 0.5% gain. The 8.6% y/y rise in leisure & hospitality earnings stayed below the 13.3% December peak, and professional & business sector earnings increased 5.6% y/y, down from 7.0% in March. Running counter to these y/y decelerations, information service sector earnings rose 6.0% y/y, up from stability y/y last fall. The gain in financial activities earnings picked up to 4.2% y/y from 2.7% as of May but it remained below the 7.8% March 2021 peak.

The average workweek slipped to 34.5 hours in August from 34.6 hours in July. These readings were down from a 35.0 hour high reached in January of last year. The workweek in the goods-producing sector eased to 39.9 hours but has been trending sideways since late-202. The construction sector average workweek held steady at a reduced 38.8 hours and the factory sector workweek eased to 40.3 hours. The average workweek in service-producing sectors fell to 33.4 hours and it remained below the 33.9 hour high in early-2021. The aggregate weekly hours index, a key indicator of production and income, eased 0.1% in August but the 4.0% y/y rise has held steady this year.

The household survey showed workers flooding back into the labor market last month, pushing up the unemployment rate to 3.7%. The labor force participation rate surged to 62.4% in August and regained its March peak. The rate for teenagers strengthened to 37.7% from 35.8%. For workers aged 20-24, the rate fell to 70.3% from a 72.0% December high, but for workers aged 25-54, it rose to 82.8%, the highest rate since before its collapse in the 2020 recession. For individuals 55 and over, the rate fell to 38.6% and has been trending lower since February.

The employment/population ratio for all workers edged up to 60.1% in August, up from 58.0% in June of last year. It remained below its reading of 61.2% in February 2020 just prior to the pandemic. The level for those 16 and over eased to 71.6%, up from 69.9% last August. For workers aged 25-54 the rate increased to 80.3%, the highest level since just before the recession.

The average duration of unemployment rose slightly in August to 22.3 weeks but remained down from a 31.6 week high in June of last year. The median duration of unemployment held steady at 8.5 weeks for a third month, but stood below its level of 14.2 weeks twelve months earlier. The ranks of those individuals unemployed for 27 weeks or more rose slightly m/m but fell by roughly two-thirds y/y.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.

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