Total nonfarm payroll employment rose by 130,000 in August, and the unemployment rate was unchanged at 3.7%t, the U.S. Bureau of Labor Statistics reported today. The number widely missed economist expectations for a gain of 170,000 jobs and was seen by some economists as a sign that the Federal Reserve will elect to cut its benchmark interest rate further.
Employment in federal government rose, largely reflecting the hiring of temporary workers for the 2020 Census. Notable job gains also occurred in health care and financial activities, while mining lost jobs.
In August, 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. Employment showed little change over the month in construction, manufacturing, transportation and warehousing, and leisure and hospitality. Job growth in these industries has moderated thus far in 2019 compared with 2018.
Lawrence Yun, chief economist for the National Association of Realtors, said, "The soft job gains in August assures that the Federal Reserve will be cutting interest rates. The mortgage rates could fall to 3.3% before the year end. But lower rates may not help with affordability because home prices are re-accelerating higher, easily above the latest wage growth of 3.2%. Housing inventory has recently stopped rising, putting upward pressure on home prices of moderately priced homes. "
He continued, “The data masks the weakening private sector job creation. The Federal government boosted the overall figure by 28,000 in preparation for Census 2020. The economy is clearly weakening and the employment conditions show a lagging indicator. But there is still a time to get the economy into a higher gear with increased home building of affordable homes and lessening trade tensions.”
Mike Fratantoni, senior VP and chief economist for the Mortgage Bankers Association, took a similar view. “As expected, given the global slowdown in economic growth, and increasing signs of a slowing in the pace of U.S growth, we are seeing job gains cool down a bit. August’s 130,000 increase in jobs was somewhat supported by federal government hires for the decennial Census, with private growth of only 96,000 jobs. We expect that job growth will continue to wane, and that there will be some upward pressure on the unemployment rate over the next year."
Fratantoni concluded, "That said, the unemployment rate remains remarkably low, wage growth continues to be steady, and also well above the rate of inflation. With more purchasing power and low mortgage rates, we expect to see continued strength in the housing market."