In terms of the August numbers, headline non-farm payrolls rose 142k versus the 165k consensus, so a slight downside miss, but there were 86k of downward revisions to the past two months. We are seeing consistent downward revisions to the data now, and that doesn’t even include the provisional benchmark revisions released a few weeks back that showed the BLS overestimated payrolls growth by an average of 78k per month in the 12 months to March 2024. For example, June was initially reported at 206k, to be revised to 179k last month, and now is just 118k, while July was revised down to 89k to 114k.
Given that, can we really trust today’s number? Do we need to knock 78k off the headline figure to take account of the error in the BLS model? – that would give payrolls growth of just 64k.
The unemployment rate has dipped back to 4.2%
On the positive side, we see that the unemployment rate has dipped back to 4.2% after rising from 4.1 to 4.3% last month. Yet the underemployment rate rose to 7.8% from 7.9% so there are a growing number of people that are working part-time, but want to work full time. In this regard, the details show manufacturing looking very weak (-24k). Retail and temporary jobs have fallen for three straight months, and IT jobs have fallen or been flat for five months.
The strength continues to be government (+24k), leisure & hospitality (+46k) and private education and healthcare services (+47k). These are sectors that are typically lowered paid, less secure and more part-time. As such, I would argue that the details are weaker than suggested by the headline; the typical sectors I would associate with a strong, vibrant economy are not performing (business services, manufacturing, transport and logistics, tech, etc).