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August payroll employment increased by a solid 201,000 jobs.

August 2018 U.S. Employment

September 7, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Another Good Jobs Report Keeps the Fed on Track for a Sept. Rate Hike

*     Payroll Employment increased by 201,000 jobs in August. June and July were revised down by 50,000.
*     The Unemployment Rate for August was unchanged at 3.9 percent.
*     Average Hourly Earnings increased by 0.4 percent in August, and were up 2.9 percent over the year.
*     The Average Workweek in August was unchanged at 34.5 hours.

August payroll employment increased by a solid 201,000 jobs. Negative revisions totaling 50,000 for June and July bought some of that back, but labor market conditions still look good. Average hourly earnings increased by 10 cents, or 0.4 percent, to hit $27.16, up 2.9 percent over the previous 12 months. That is the strongest year-over-year gain in average hourly earnings this side of the Great Recession. The average workweek was unchanged at 34.5 hours. The stronger earnings numbers and the solid monthly payroll increase will keep the Federal Reserve on track to increase the fed funds rate by 25 basis points, to a range of 2.00-2.25 percent, when the FOMC next meets over September 25/26. The implied odds of a September 26 rate hike are near 100 percent according to the CME Group.

Establishment detail was mixed, but the big categories, professional/business services and educational/healthcare had sizeable gains. Mining and logging industries added 6,000 jobs in August. Construction built 23,000 net new jobs for the month. Manufacturing showed a small net loss of 3,000 jobs, breaking a 12-month string of gains. Retail trade was soft, shedding 5,900 jobs in August. Information industries reduced payrolls by 6,000. Financial services employment increased by 11,000 jobs on net. Employment in professional/business services increased by a strong 53,000 jobs, as it also did in education/healthcare. Leisure and hospitality industries added 17,000 net new jobs. Government employment eased by 3,000 jobs in August.

Market Reaction: U.S. equity markets opened with losses. The 10-Year T-bond yield is up to 2.93 percent. NYMEX crude oil is down to $67.20/barrel. Natural gas futures are down to $2.77/mmbtu.

For a PDF version of this report, click here: August 2018 U.S. Employment

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