Continued signs of a slowing economy were reported Friday by the Bureau of Labor Statistics, as the economy added just 130,000 jobs in August—a 20% drop from July.
The monthly average job growth so far in 2019 is 158,000, which is far below the 223,000 average in 2018. The economy added 159,000 jobs last month.
“This morning’s job report is consistent with our forecast of a gradually slowing economy, even though the payroll numbers were below our forecast. Nonfarm payrolls increased by 130,000 in August, although private payrolls increased by only 96,000, as government hiring received a boost from 25,000 temporary Census workers,” said Fannie Mae’s Chief Economist Doug Duncan. “Job growth for the previous two months was revised downward again, the fourth consecutive month of downward revisions to prior months.”
George Ratiu, Senior Economist for realtor.com, said the new job numbers show that companies are being “cautiously optimistic” about the economic outlook and are taking a more measured approach.
The unemployment rate for the past month has been unchanged from the past three months at 3.7%. Those unemployed more than 27 weeks rose slightly to 1.24 million from 1.16 million in July.
Unemployment rates for African-Americans fell from 6% in July to 5.5% in August, which is down year-over-year from 6.3% in August 2018. Hispanic unemployment also fell to 4.2% in August and is down from last year’s number of 4.7%.
One of the report’s bright spots was that average hourly earnings rose 11 cents in August to $28.11, which follows 9-cent gains in both June and July. Average earnings have risen 3.2% over the past year.
“August’s earnings growth of 3.2% provided a much-needed boost to employees, especially in light of rising home prices,” Ratiu said. “With mortgage rates 100 basis points lower than a year ago, home shoppers may find opportunities in the slower fall months. However, they will need continued patience as inventory remains tight.”
First American’s Deputy Chief Economist Odeta Kushi said that 70% of economic growth is driven by consumer spending, which provides a positive outlook for consumer economic strength.
“Higher wages prompted a 2.7% increase in household income in August, the highest rate of growth since March of this year,” Kushi said.