United States Economy Adds 200,000+ Jobs in August
August 2018 proved to be another strong month in terms of job growth in the United States, with the economy adding 201,000 new jobs during the month. Not only did this mark the 95th consecutive month of job gains but also slightly outpaced the 12-month average of 196,000 jobs added. Despite the gains, the unemployment rate remained at 3.9% — which still represents an 18-year low. Additionally, as CNN Money reports, today’s Labor Department release also showed a significant increase in wages.
The latest jobs report records a 2.9% year over year increase to average hourly earnings. While that marks the best figure since 2009, CNN Money notes that the number is not adjusted for inflation. Meanwhile the current average hourly wage now sits at $27.16 — up 10¢. A likely explanation for the wage increases is the current skilled worker shortage that many companies are experiencing. As Charles Schwab chief investment strategist Liz Ann Sonder explains,”We don’t think it’s a fluke. We think we are at that stage where the labor market has gotten so tight that you’re going to see upward pressure on wages.”
Something of interest is that, while the unemployment rate now sits at 3.9%, MarketWatch notes that a dip to 3.7% would represent the lowest level of unemployment since 1969. Moreover many economists suggest the rate could keep falling toward 3.5%. Of course this assumes that the aforementioned skilled worker shortage doesn’t become a larger barrier. Perhaps Amherst Pierpont Securities chief economist Stephen Stanley put it best, telling MarketWatch, “As long as firms can find job candidates to their liking, employment should continue to expand at a hefty pace.”
Returning to the August jobs report, the largest gains were observed in professional and business services, health care, and wholesale trade. Meanwhile the manufacturing sector lost 3,000 jobs for the month, with U.S. trade relations seeming to be a likely factor for the decline. That said, August 2018 was the first time the sector saw a monthly dip in more than a year and it still has a net positive of 254,000 jobs for 2018. As you might expect, retailers also cut jobs during the month. On the other side of things, with a rate of just 2.5%, management occupations along with maintenance and repair positions saw the lowest unemployment of any sector.
August’s jobs report highlights once again just how strong the current economy is. With monthly job gains now pretty much a given (for the time being), surely many observers will be paying more attention to wage growth, which seemed to be the real story this time around. Of course there are still a few unknowns that could plague employers and prevent unemployment from reaching that near 50-year low but, for now, things seem to be rolling along just fine.