US labor market mending continues

• US NFP increased 1.4m in August

• Unemployment falls for fourth straight month to 8.4% from 10.2%

• Wage growth increased 0.4% mom and 4.7% yoy

• Labor force participation rate increased to 61.7%

• Jobs rebound continues, but signs of moderation ahead

The American economy continued to churn out jobs in August, albeit at a slower rate than in June and July. Indeed, the US regained 1.4 million jobs in August and the unemployment rate posted a surprisingly large drop to 8.4%, suggesting an economic recovery is still plowing ahead even if the pace of growth has slowed since the start of the summer. In August, nonfarm employment was below its February level by 11.5 million, or 7.6%. The change in total nonfarm payroll employment for June was revised down by 10,000, from 4.791m to 4.781m, and the change for July was revised down by 29,000, from 1.763m to 1.734m. With these revisions, employment in June and July combined was 39,000 less than previously reported.

Employment in government increased by 344,000 in August, largely because of a big increase in temporary Census workers. In the private sector, 12 out of the 13 private industries added jobs, with retailers led the way in hiring again as they brought back almost one-quarter of a million workers. Restaurants also added 134,000 jobs. White collar businesses added almost 200,000 jobs, though more than half were temporary. Transportation and warehousing jobs increased by 78,000. Health-care providers boosted payrolls by 75,000. Financial firms hired 36,000 workers. And manufacturers added 29,000 people. Mining and logging continued to shed jobs for the fifth consecutive month since March, and the weakness there could persist with activity in oil & gas extraction still very soft.

The most positive news was a big reduction in the official jobless rate to 8.4% from 10.2%, marking the fourth straight decline from a pandemic peak of 14.7%. The labour force participation rate rose again in August after ticking unexpectedly lower in July. The average hourly earnings rose 0.4% from the prior month and were up 4.7% from a year ago. The average workweek edged up to 34.6 hours.

Source: BIMB Securities Research - 7 Sept 2020