Employers added 187,000 jobs in August and unemployment rose to 3.8 percent as the economy continued to lose momentum built up after pandemic lockdowns.Monthly change in jobs More
The six-year agreement is expected to increase traffic at Pacific ports, which had sagged because of the prospect of a walkout.Dockworkers at ports along the West Coast have ratified a new contract, securing a sweeping agreement set to last six years and expected to ease tensions after cargo shipments were diverted to other regions.The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association, which operates the terminals, covers 22,000 dockworkers at 29 ports from Los Angeles to Seattle.The contract was approved by 75 percent of members who voted, the union said late Thursday. Details of the agreement were not released publicly, and the union declined to comment. Unionized workers at the ports have average salaries in the low six figures.The maritime association did not respond to a request for comment.The two sides announced in June that they had reached a tentative agreement after a year of negotiations that prompted intervention from the Biden administration and coincided with a decline in the volume of cargo at several major ports along the West Coast.During the negotiation period, as workers staged a series of slowdowns, including at the twin ports of Los Angeles and Long Beach, some shipping companies diverted freight to ports along the Gulf and East Coasts and then never returned to their old routes.And the movement of goods continued to lag into the summer.At the Port of Los Angeles, the amount of cargo imported in July was down 25 percent from a year earlier. But at Port Houston, where some companies rerouted cargo, officials reported its best July on record in processing cargo.Geraldine Knatz, a former head of the Port of Los Angeles and now professor of the practice of policy and engineering at the University of Southern California, said she expected the contract’s ratification to give some shippers the level of comfort they needed to return to their old routes.“Everyone is expecting we will see an increase in volume,” she said of cargo handled on the West Coast.Matthew Shay, president of the National Retail Federation, said the West Coast ports played a critical role in the vitality of the business community nationwide.“Now that an agreement has been ratified by all parties, the millions of businesses and employees who rely on their operations can be assured that long-term stability will remain at the West Coast ports,” Mr. Shay said.Santul Nerkar More
The August jobs report was another sign that the U.S. labor market is cooling off.
The U.S. Department of Labor said Friday that the economy added 187,000 jobs in August.
The August jobs report was another sign that the U.S. labor market is cooling off, though some of the sectors that have fueled the post-pandemic rebound remain strong.
The U.S. Department of Labor said Friday that the economy added 187,000 jobs in August even as the unemployment rate ticked up to 3.8%. Payrolls growth was driven by health care and social assistance, which added more than 97,000 jobs. The category would have grown by more than 100,000 when including private education, as some economists do.
Leisure and hospitality also added another 40,000 jobs.
“Leisure and hospitality still remains well below pre-pandemic levels of employment, and well below pre-pandemic trends in employment. So we’re not that surprised by continued growth there. In health care, you’re getting back to and above pre-pandemic trends in employment, in part due to increased demand,” said Andrew Patterson, senior international economist at Vanguard.
On the other side of the report, some of the categories with the biggest job losses came with important caveats.
For example, the transportation and warehousing sector lost more than 34,000 jobs. That was driven by a drop of nearly 37,000 positions in trucking, which the Labor Department attributed to a business closure. This is likely a reference to Yellow filing for bankruptcy protection in August.
Similarly, the 15,000 job losses in the information sector seemed to be driven mostly by the Hollywood strikes by writers and actors, which has largely shut down production in the U.S. The subcategory for motion picture and sound recording dropped close to 17,000 jobs, the Labor Department said.
“I’d say these are probably one-offs. … We wouldn’t expect that to continue going forward. But even if you add those back in, you’re still in the low 200,000 jobs, which is a downshift from mid-200,000s which we were seeing for much of the year, and even higher than that earlier in the year,” Patterson said.
“That said, even with these ‘weaker reports,’ you’re still talking about adding 180,000 jobs a month, which is well above the rate needed to account for new entrants into the labor market,” the economist added.
The report also cited that temporary help services jobs declined about 19,000 and are now down 242,000 since March 2022.
— CNBC’s Gabriel Cortes contributed reporting. More
The overall unemployment rate climbed to 3.8%. The jobless rate came in ahead of the Dow Jones forecast of 3.5%.
The unemployment rate for Black workers declined, however, falling to 5.3% from 5.8% in the previous month.
Unemployment rates for Hispanic and Asian workers inched higher in August.
Pixelseffect | E+ | Getty Images
The unemployment rate for Black workers slipped in August, bucking the broader trend of a higher overall jobless rate.
The overall unemployment rate ticked up to 3.8% last month, the highest since February 2022. It came as the labor force participation rate — a measure of the number of people who are employed or seeking employment — climbed to 62.8% for its highest level since February 2020.
The jobless rate declined for Black workers, sliding to 5.3% in August, compared to 5.8% in July.
When accounting for gender, the unemployment rate for Black men age 20 and older came down to 5%, a decline from the 5.3% rate in July. Black women saw their jobless rate fall to 4.7%, compared to 5.2% the prior month.
“I am relieved that the Black unemployment rate is coming down; it had been a little elevated a couple of months earlier,” said Elise Gould, senior economist at the Economic Policy Institute. “Hopefully that’s a positive trend.”
Among Black workers, the labor force participation rate was little changed from the prior month. It came in at 62.6% in August, compared to 62.7% in July.
The jobless rate moved higher for Asians and Hispanics, however.
Among Asians, the unemployment rate increased to 3.1% in August from 2.3% in July. Hispanics saw their jobless rate rise to 4.9%, up from 4.4% a month earlier.
Gould noted that the household data underlying the racial and ethnicity figures are based on smaller sample sizes, so there can be significant volatility from one month to the next.
A potential area of concern emerged in the latest release, however: decline in jobs in the state and local government education space. Local government education payrolls fell by more than 10,000 in August, while state government education jobs dropped by nearly 5,000.
“State and local education fell,” said Gould, adding that she’s watching that sector as it’s a notable employer of Black workers and women. “That sector is concerning, especially as students go back to school this month.”
— CNBC’s Jeff Cox contributed to this story. More
American workers got smaller pay increases in August. That could be welcome news for policymakers at the Federal Reserve.Average hourly earnings rose 0.2 percent from July, the slowest pace of monthly growth since early last year. Pay was up 4.3 percent from a year earlier, versus a peak growth rate of nearly 6 percent in March 2022.The earnings data is preliminary and can be skewed by shifts in the industries that are hiring, among other factors. But the slowdown in wage gains is consistent with other evidence suggesting a gradual cooling in the labor market. Employers are posting fewer job openings — a sign of reduced demand for labor — and workers are changing jobs less frequently, a sign they are also becoming more cautious.For workers, the pain of slower wage growth is being offset, at least to some degree, by cooling inflation. Price increases outpaced pay gains for much of last year, but that trend has since reversed. Pay, adjusted for inflation, has risen in recent months; the Labor Department will release August price data later this month.For policymakers, a cooler pace of wage growth — if it is sustained — would be an encouraging sign that the labor market is coming off the boil. Fed officials have been worried that rapid wage gains, while not responsible for the recent increase in prices, could make it difficult for inflation to return to their long-term goal of 2 percent per year. The data released Friday suggests that the labor market is returning to balance — though hourly earnings are still rising faster than many economists consider sustainable in the long term.“While wage growth remains well above the Fed’s comfort zone, recent data points to a gentle moderation in labor cost pressures amid signs of labor market rebalancing,” Gregory Daco, chief economist for EY, wrote in a note to clients. More
The unemployment rate rose sharply in August, as the summer of 2023 neared a close with a job market in slowdown mode.
Nonfarm payrolls grew by a seasonally adjusted 187,000 for the month, above the Dow Jones estimate for 170,000, the U.S. Bureau of Labor Statistics reported Friday.
However, the unemployment rate was 3.8%, up significantly from July and the highest since February 2022, and estimates for previous months showed sharp downward revision. That increase in the jobless level came as the labor force participation rate rose to 62.8%, the highest since February 2020, just before the Covid pandemic declaration.
A more encompassing unemployment measure that counts discouraged workers as well as those working part-time for economic reasons jumped to 7.1%, a 0.4 percentage point increase and the highest since May 2022.
Average hourly earnings increased 0.2% for the month and 4.3% from a year ago. Both were below respective forecasts of 0.3% and 4.4% and another possible sign that inflation pressures are easing.
Health care showed the biggest gain by sector, adding 71,000. Other leaders were leisure and hospitality (40,000), social assistance (26,000) and construction (22,000).
Transportation and warehousing lost 34,000 and information declined by 15,000.
While the nonfarm payrolls growth continued to defy expectations, previous months’ counts were revised considerably lower.
The July estimate moved down by 30,000 to 157,000. June was revised lower by 80,000 to 105,000, making that the smallest month gain since December 2020.
The unexpected increase in the jobless rate came as the rolls of the unemployed grew by 514,000. The household count of those employed increased by 222,000.
When it comes to the closely watched jobs count, August is often one of the most volatile months of the year and can be subject to sharp revisions later. While the initial estimate and final counts in 2022 were little changed, the 2021 figure ended up more than doubled in the final count.
August’s jobs reading comes at a pivotal time as Federal Reserve officials look to chart a course forward for monetary policy.
Markets widely expect the Fed to skip a rate increase at its September 19-20 meeting. However, market pricing still points to about a 38% probability of a final hike at the Oct. 31-Nov. 1 meeting, according to CME Group data.
Recent data has painted a mixed picture of where the economy is headed, with overall growth holding steady as consumers continue to spend, but the labor market beginning to loosen from historically tight conditions.
Job openings, for instance, fell to 8.83 million in July. That’s still well above where they were prior to the Covid pandemic but is the lowest level since March 2021. That equated to 1.5 openings for every worker the BLS counts as unemployed.
At the same time, inflation has shown signs of cooling even though it remains well above the level where Fed policymakers feel comfortable.
The Commerce Department reported earlier this week that personal consumption expenditures prices, the Fed’s preferred inflation gauge, rose just 0.2% in July. That equated to a 3.3% 12-month gain, or 4.2% when excluding food and energy – the “core” level that the Fed thinks is a better measure of longer-term inflation.
Consumer spending was strong during the month, rising 0.6% when adjusted for inflation even though real disposable personal income fell 0.2%. Households have been using credit cards and savings to compensate, as the personal savings rate fell to 3.5% in July, down sharply from the 4.3% level in June.
The department also reported that gross domestic product increased at a 2.1% annualized rate for the second quarter, a level that is still above what the Fed considers trend growth for the U.S. economy but below the initial 2.4% estimate.
However, the Atlanta Fed is tracking third-quarter GDP growth at a robust 5.6% pace. That counters long-running expectations that the economy is likely to hit at least a shallow recession following a series of aggressive Fed interest rate hikes.
This is breaking news. Please check back here for updates. More
Federal Reserve officials are likely to closely watch employment numbers on Friday for further signs that the economy’s momentum is slowing, an important consideration for them in deciding whether to lift interest rates further.Fed policymakers have sharply increased borrowing costs over the past year and a half, to a range of 5.25 to 5.5 percent, from near-zero as recently as March 2022. Those moves were meant to slow the economy by making it more expensive to borrow to buy a house, purchase a car or expand a business.Now, central bankers are contemplating whether they need to raise interest rates one more time. Policymakers had previously forecast another move before the end of 2023.Most investors do not expect any increase to come at the Fed’s next meeting on Sept. 19-20, but officials have not ruled out a move. And even if central bankers leave rates unchanged in September as markets expect, policymakers will release a fresh set of economic projections showing how they expect the labor market, inflation and interest rates to shape up over coming months and years.That’s where incoming data reports — including the fresh jobs figures — could matter. Employers have been hiring at a surprisingly steady clip this year, given how much the Fed has raised interest rates. Policymakers will be gauging whether that trend continues to slow.And Fed officials will devote attention to how quickly wages are climbing.Central bankers have de-emphasized pay gains as a potential driver of inflation in recent months, suggesting instead that rapid wage growth probably signals that workers are trying to catch up with past inflation. Even so, many standard economic models suggest that if pay is climbing steeply, it could be hard to fully snuff out rapid inflation. Companies facing heftier labor costs will probably try to charge more to protect their profits, and workers who are earning more may find themselves capable of and willing to pay higher prices.Jerome H. Powell, the Fed chair, recently highlighted slowing jobs growth, stable hours worked and slowing pay gains across a range of measures as signs that the labor market is getting into a better balance.“We expect this labor market rebalancing to continue,” he said, speaking last week in Wyoming. But, he warned in the speech, the Fed is watching to make sure the economy doesn’t heat back up in spite of higher interest rates, a development that could mean that borrowing costs need to go higher.“Evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response,” Mr. Powell said. More
Morgan Stanley has found a notable impact to consumer spending and the broader economy from Taylor Swift and Beyoncé’s tours, as well as summer movie blockbusters “Barbie” and “Oppenheimer.”
But the firm warned that an unwinding in these, paired with the resumption of student loan payments, could drag down the fourth quarter.
Taylor Swift, Beyonce, Barbie, Oppenheimer
Getty Images
Consumer spending may not be out of the woods.
Real spending is expected to come in 1.9% higher in the third quarter, helped in part by stadium tours from music superstars Taylor Swift and Beyoncé, as well as summer movie blockbusters “Barbie” and “Oppenheimer,” according to Morgan Stanley. But the economic halo may be short lived, the firm warned on Wednesday.
Taken together, Morgan Stanley economist Sarah Wolfe said the “unprecedented” revenues tied to these events should add a seventh of one percentage point to consumption growth in the quarter. They fall under the movie consumption and non-sports live entertainment portions of the personal-consumption expenditures price index, known as the PCE.
Those sectors make up around 0.2% and 0.05% of the total index, respectively. That means fans showed up and spent enough in these typically miniscule business areas to substantially boost the health of the broader U.S. economy.
“These categories alone would have to see massive swings in order to impact overall economic activity,” Wolfe said in a note to clients. “And they have.”
But the end of those music tours in the U.S. and declining theater viewership for these films the rest of the year could lead to a 0.6-percentage-point “hangover effect” to consumer spending in the fourth quarter. Simultaneously, Wolfe said the return of student loan payments this fall should pull consumption down another by another eighth of a percentage point.
“The factors boosting 3Q consumption are extraordinary,” Wolfe said. “In 4Q, these factors not only unwind, but the October expiration of the student loan moratorium further weighs on consumption.”
A not-so-cruel summer
Taylor Swift’s “Eras” and Beyoncé’s “Renaissance” tours have filled stadiums around the country and created online buzz.
Swift’s tour, in particular, has garnered attention for its expensive resale market and ticket purchasing fiasco that brought scrutiny to Ticketmaster from fans and lawmakers alike. Beyoncé made national headlines for paying to keep the metro system of Washington, D.C., running later after her show was delayed by inclement weather.
Both tours have been credited for boosting the economies of the cities they visit as fans crisscross the country for their chance to see the singers. The concerts and movies combined have also inspired attendees to dress the part, encouraging further spending on new outfits and accessories like friendship bracelets and custom black fedoras.
The impact has garnered the attention of everyone ranging from local business owners to the Federal Reserve. Last month, the Philadelphia Fed reported hotel bookings when Swift came to town showed their strongest growth since the pandemic began.
“Despite the slowing recovery in tourism in the region overall, one contact highlighted that May was the strongest month for hotel revenue in Philadelphia since the onset of the pandemic, in large part due to an influx of guests for the Taylor Swift concerts in the city,” the central bank officials said in the Beige Book, a summary of economic activity released eight times a year.
Swift announced on Thursday that a filmed version of her tour will debut in theatres on Oct. 13, originally the same day as the new “Exorcist” film from Blumhouse Productions and Universal. The pair became known online as #Exorswift before the release date for the latest “Exorcist” installment was moved up. While the tour film can provide a bump to movie ticket sales, the fourth quarter is already expected to see strong sales given its proximity to the Oscars.
It’s the second time this year that two unrelated movies released on the same day have become intertwined. Warner Bros. “Barbie” and Universal’s “Oppenheimer” became known as “Barbenheimer,” and the pair supercharged box office numbers last month even as two Hollywood union strikes have essentially halted movie production.
“Barbie” has become the highest-grossing release in the U.S. this year, while “Oppenheimer” is now director Christopher Nolan’s third best performing movie ever, domestically. With help from other films, the opening weekend was the fourth biggest ever for the U.S. box office.
Retailers have jumped on the Barbie craze in particular, hawking themed goods from heeled shoes to pool floaties.
Gray November?
Wolfe noted that the drag on consumer spending from the end of the student loan moratorium has been somewhat mitigated by the Biden administration’s 12-month grace period. Under this plan, borrowers who fail to make payments for the first year will be spared from some of the harshest consequences.
With the tours and the movies winding down, Wolfe’s team anticipates the real PCE will contract by 0.6% between the third and fourth quarter. Real gross domestic product should eke out a 0.1% gain in the fourth quarter.
That shift could catch the attention of the Fed, according to Wolfe. She thinks the central bank, which is still waging war on inflation, should take the cultural slowdown as another reason to be patient when deciding on the future path of interest rates.
Disclosure: Comcast owns Universal and NBCUniversal, the parent company of CNBC. More
