EmailNonfarm payrolls increased by a lackluster 96,000 in August following a downwardly revised 141,000 (from 163,000) increase in July. The Briefing.com consensus expected payrolls to increase by 130,000. Private payrolls added 103,000 jobs in August, down from 162,000 new jobs in July. The consensus expected 144,000 new private jobs. There is no doubt that the employment data were disappointing. The August ADP numbers implied private payrolls would increase by slightly more than 200,000 and the initial claims level supported payroll growth around 150,000. It seems that businesses are cutting back on firing, yet have not hired new workers as they are afraid to expand. It is clear that the uncertainty stemming from the political discourse and the fiscal cliff, along with the European debt crisis and a slowdown in Asia, are having a negative impact on business conditions. This will likely last through the rest of the year. Average weekly hours worked remained at 34.4 hours in August after a downward revision (from 34.5) to the July data.
Average hourly earnings growth was flat after increasing 0.1% in July. Even though hours and earnings levels were flat, the slight increase in payrolls was enough to generate a 0.1% increase in aggregate wages. However, that is not enough to prevent consumption growth from decelerating from July rates. The unemployment rate ticked down from 8.3% in July to 8.1% in August. Unfortunately, the move was the result of a sizable drop in the labor force participation rate (from 63.7% to 63.5%). That rate is the lowest since September 1981. The number of employed workers actually declined by 119,000 and the employment-to-population ratio fell to 58.3%.
