As we begin the month of September, many are heavily anticipating the upcoming jobs report. Analysts advise job growth has probably slowed a bit from the somewhat frenzied rate in July, but the numbers should still be promising. More important, it seems we can expect to see broad hiring spread out across several industry sectors.
While the monthly jobs report is always an important indicator of economic health in the United States, August’s release carries a little more weight is it will influence how the Federal Reserve approaches the interest rate decision in the next few weeks.
Specifically, analysts anticipate the economy to have added approximately 318,000 jobs in August. This is about 40 percent lower than the 528,000 jobs added in the month of July, so in some regards it could be regarded as disappointing. In addition, first-time unemployment applications dropped to 232,000 for the week ending August 27. This is 5,000 lower than the week prior, revised down from 6,000 expected claims.
Most importantly, this is the lowest level for this metric since June 25, when only 231,000 initial claims were reported. Indeed the drop in applications marks three straight weeks of optimistic decline, to a two-month low.
That said, the lower numbers have not altered the unemployment rate, which is holding steady at 3.5 percent. And while 3.5 percent is still higher than we would prefer, it is still pretty good under these circumstances; and since wages are actually up 0.4 percent (5.3 percent, annualized), these numbers are, indeed, promising.
Should the data reflect expectations, the next important report will come in the second week of September: the Consumer Price Index (CPI), for August. The expectation is that CPI will be remain higher, but still below the 8.5 percent rate in July, mostly on the merit of falling gas prices. This will be a welcomed reprieve at a stressful time.
Another positive trend is the reduction in layoffs. The jobs report also revealed that US employers laid off only 20,485 workers last month; that is 21 percent lower than July numbers, though still 30 percent higher than August of 2021.
