The Labor Department on Friday releases the August jobs report. Watch for signs the economy can maintain this summer’s renewed momentum in job growth. Economists project the economy added 180,000 jobs last month and the unemployment rate dropped to 4.8% from 4.9% in July.
By Eric Morath
The Wall Street Journal
Employers added 255,000 jobs in July and 292,000 in June, the best two-month stretch of job creation this year. That eased fears caused by a weak May report. Overall payroll growth in 2016 remains below the pace of the prior two years. Look to see if August growth slows and for any revisions to earlier months.
2 Jobless Rates
The unemployment rate is expected to hold below 5% and remain near postrecession lows. That number will get more attention as the presidential campaign heads into the home stretch. But watch the broader measure that includes discouraged workers and those in part-time jobs who want full-time work. That number remains elevated seven years into the expansion, compared with the narrower jobless rate.
3 Wage Gains
Average hourly earnings rose 2.6% from a year ago, matching the best gain of the expansion. If wage growth keeps that pace, it would be a sign the labor market is tightening further and could help support consumer spending in the second half of the year.
2.6% — Change in average hourly earnings for private-sector workers, from a year earlier
4 Participation Equation
While hiring and wages are up and unemployment is down, the share of Americans in the labor force is only slightly above a 40-year low. And the figure has trended down since hitting a peak for the year in March. A high number of Americans on the sidelines of the labor force suggests there’s more slack in the jobs market than the headline figures suggest.
5 Fed Watch
Friday’s report will be watched closely for what it means to the Federal Reserve. Firm hiring and a steady unemployment rate could bolster the case for central bankers to raise their benchmark interest rate this month for the first time since December. But a severe miss of expectations, as happened in May, could cause Fed officials to recalculate. “Our decisions always depend on the degree to which incoming data continues to confirm the committee’s outlook,” Fed Chairwoman Janet Yellen said last week.
Tags: Americans in the labor force, discouraged workers, Federal Reserve, in part-time jobs who want full-time work, interest rate, Janet Yellen, jobs market, labor participation rate, U.S. economy, unemployment rate, wage growth