Total nonfarm payroll employment increased by a meager 142,000 in August, well below replacement levels and well below analyst expectations, the Bureau of Labor Statistics reported Friday.
The free fall drop represents a month-over-month decline of 60,000 jobs from August and is far below the ADP payroll estimate of 204,000 reported Thursday.
The unemployment rate declined from 6.2% to 6.1% driven by a drop in labor force participation. Job gains occurred in professional and business services and in health care.
“Today’s report ended the streak of six monthly job gains of more than 200,000. The downside surprise was at odds with other recent reports, including initial jobless claims, job openings, and purchasing managers’ surveys, which have portrayed improving labor market conditions. Thus, our view of the underlying trend of the jobs market has not changed, nor has our call regarding the ‘lift-off’ for the target fed funds rate, which we expect to happen early in the second half of 2015 with a risk of a sooner rather than a later hike,” said Doug Duncan, chief economist at Fannie Mae. “While the hiring picture has improved this year, the wage picture has not as wage gains have registered little change. Our August National Housing Survey, to be released next week, is expected to show more subdued consumer expectations regarding housing, partly due to the lack of momentum on their assessment of household incomes. These data provide support for our view that housing’s growth for the remainder of 2014 and for 2015 will be modest.”
In August, both the unemployment rate (6.1%) and the number of unemployed persons (9.6 million) changed little. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively.
Among the major worker groups, the unemployment rates in August showed little or no change for adult men (5.7%), adult women (5.7%), teenagers (19.6 %), whites (5.3%), blacks (11.4%), and Hispanics (7.5%). The jobless rate for Asians was 4.5% (not seasonally adjusted), little changed from a year earlier.
The number of long-term unemployed (those jobless for 27 weeks or more) declined by 192,000 to 3.0 million in August. These individuals accounted for 31.2% of the unemployed.
Over the past 12 months, the number of long-term unemployed has declined by 1.3 million. The civilian labor force participation rate, at 62.8%, changed little in August and has been essentially unchanged since April.
In August, the employment-population ratio was 59% for the third consecutive month but is up by 0.4 percentage point from a year earlier.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in August at 7.3 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
In August, 2.1 million persons were marginally attached to the labor force, down by 201,000 from a year earlier. (The data are not seasonally adjusted.)
These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.4 million persons marginally attached to the labor force in August had not searched for work for reasons such as school attendance or family responsibilities.
Professional and business services added 47,000 jobs in August and has added 639,000 over the past year. In August, management of companies and enterprises gained 8,000 jobs. Employment continued to trend up over the month in administrative and support services (+23,000), architectural and engineering services (+3,000), and in management and technical consulting services (+3,000). Employment in health care increased by 34,000 in August. Within the industry, offices of physicians and hospitals added 8,000 jobs and 7,000 jobs, respectively. Social assistance employment continued to trend up over the month (+9,000) and has expanded by 104,000 over the year.
Within leisure and hospitality, employment in food services and drinking places continued to trend up in August (+22,000) and is up by 289,000 over the year. Construction employment continued to trend up in August (+20,000). This is in line with its average monthly job gain of 18,000 over the prior 12 months. In August, employment trended up in specialty trade contractors (+12,000) and construction of buildings (+7,000).
Manufacturing employment was unchanged in August, following an increase of 28,000 in July. Motor vehicles and parts lost 5,000 jobs in August, after adding 13,000 jobs in July. Auto manufacturers laid off fewer workers than usual for factory retooling in July, and fewer workers than usual were recalled in August. Elsewhere in manufacturing, there were job gains in August in computer and peripheral equipment (+3,000) and in nonmetallic mineral products (+3,000), and job losses in electronic instruments (-2,000).
In August, retail trade employment was little changed (-8,000). Food and beverage stores lost 17,000 jobs; this industry was impacted by employment disruptions at a grocery store chain in New England. Elsewhere in retail trade, automobile dealers added 5,000 jobs.
The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.7 hours for the sixth consecutive month.
Average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents in August to $24.53. Over the year, average hourly earnings have risen by 2.1%. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents to $20.68.