Following a heady read from private-sector payroll numbers Wednesday from ADP ADP , where reported new jobs were well beyond 200K for the month of August and far surpassed the estimates in aggregate, we see mildly disappointing results this Friday for the BLS non-farm payroll report: 156K new jobs in August, beneath the 180K consensus. Unemployment rose to 4.4% from the previous and expected 4.3% – still healthy, but not as robust as expected. And August is one of those strange months where things like hiring new employees lags, seasonally.Average hourly earnings rose only 0.1% for the month, further pushing the narrative that inflation – which was expected to have hit the economy much harder by this point in 2017 – remains tepid. If you were looking for a final possibility the Fed might still raise rates another quarter-percent this month, you can put a fork in it – it’s done.
Revisions for the previous two months also sank in this morning’s report: June fell from 231K to 201K and July went from 206K to 189K, for a total loss of 41K new jobs over the summer months. In August, while the private sector reportedly brought in 165K jobs, the Government (mostly state and local) lost a total of 9K. Otherwise, Manufacturing filled 36K new positions and Construction brought in 28K. The U-6 (“real employment”) stayed unchanged at 8.6%, as did the Labor Force Participation Rate of 62.9%.
None of these numbers are tragic; they are at most slightly off, with wiggle room in future revisions to push back toward that 180K consensus. After all, this remains about the average job growth per month we’ve seen throughout 2017 and for the past few years. And it remains above what we need from the domestic labor force to provide a positive impact to the U.S. economy.
In short, no need to worry. There is no Hurricane Harvey impact in any of these numbers, so they may augment certain aspects downward initially but perhaps bolster Construction job totals, etc. And this storm’s after-effects will be demonstrably different than those of Hurricane Katrina a decade-plus ago: home ownership and household income in Houston in 2017 are both far higher that in New Orleans in 2005. Meaning the efforts to put the fourth-largest city in the U.S. back together in the aftermath of this storm will be far greater than they were in the other one.
Regarding the recovery from Harvey, residents are returning home to assess the damage to their property, and more businesses are beginning to re-open their doors. Although the Arkema ARKAY chemical plant reportedly expects even more fires due to lack of cooling agents on its stored chemical compounds, elsewhere things look to be drying out. In any case, Harvey is already expected to be the most expensive storm in U.S. history… that is, unless Hurricane Irma hits an even bigger section of the country in the next week or so, such as New York City…
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