• Employment growth increased to only 130,000 in August

• The unemployment rate unchanged at 3.7%

• Wage growth accelerated

• Labor force participation rate edged up

• The door remains open for another 25bps pre-emptive Fed rate cut in September

US job growth added just 130,000 new jobs in August, marking the smallest increase in three months and offering more evidence that hiring has slowed amid a broadening trade dispute with China that’s disrupted the US and global economies. The change in total nonfarm payroll employment for June was revised down by 15,000 to 178,000, and the change for July was revised down by 5,000 to 159,000. With these revisions, employment gains in June and July combined were 20,000 less than previously reported.

Hiring slowed in August, as employment in federal government increased by 28,000. The gain was mostly due to the hiring of 25,000 temporary workers to prepare for the 2020 Census. Private hiring rose only 96,000 in August. Slower global growth and trade uncertainty have added to the pullback in private sector hiring in recent months, as some of the most trade-sensitive industries, like manufacturing, have seen hiring slow. But, services industries, like education & health and information have also reduced hiring. Professional and business services led the way again in hiring by adding 37,000 new jobs. Health-care providers boosted employment by 24,000 and financial companies created 15,000 new positions.

A slowdown in hiring, however, is not leading to slower wage growth. Average hourly earnings rose 0.4% mom and are up 3.2% versus a year ago, pushing the 3-month annualized rate up to 3.6%. But wage growth struggles to break out of its recent range. As tariffs permeate more industries, firms will have even less room to raise wages. Still, the unemployment rate held steady at 3.7%, right around multi-decade lows and the participation rate moved up to 63.2%.

Source: BIMB Securities Research - 10 Sept 2019