Just when it appeared as though everything was coming up roses for the nation's economy, the U.S. Labor Department threw some cold water on the party when it reported a little earlier this morning that non-farm payrolls had risen by just 142,000 last month. That tepid increase was well under the latest forecast gain of 225,000.
Moreover, the August increase in jobs was the smallest of the year thus far, even a bit under the January gain of 144,000. The early 2014 slump in payrolls could logically be attributed to the difficult winter. Worse, save for the 84,000 payroll gain last December (also likely weather driven), this was the smallest rise in new hiring since March of 2013, when 141,000 positions had been added. The average monthly increase over the past 12 months has been 212,000.
At the same time, June and July payrolls were revised a bit, with June's increase reduced from 298,000 to 267,000 and July's gain increased from 209,000 to 212,000. At the same time, the unemployment rate was lowered from 6.2% to 6.1%. However, that is a lagging indicator and is, as such, less closely scrutinized than the payroll metric.
As to this latter number, while the rate of joblessness ticked lower, the number of unemployed held steady at 9.6 million. Over the past year, the unemployment rate has gone from 7.2% to 6.1%, while the number of unemployed persons has fallen by 1.7 million.
Looking further at the report, we find that the number of long-term unemployed (those jobless for 27 weeks, or more) declined by 192,000 to 3.0 million. Those individuals accounted for 31.2% of the aggregate jobless total.
Looked at on an overall basis, there was little to find pleasing in this report. True, it is not a good idea to overreact to one metric, no matter how critical it is seen to be, as there often are significant monthly revisions, while some short-term factors, not known initially, can have an impact. Also, the Federal Reserve would now seem less inclined to tighten its monetary policies aggressively, or all that soon. Even so, this is a worrisome release, and although we are not revising our GDP forecast for the third quarter, which calls for a 3.0%-3.5% growth rate, this report could cause later adjustments should the September payroll report disappoint as well.