Employment continued to deteriorate in the United States in August. Job creation was 142,000 non-farm jobsas reported Friday by the Labor Department’s Bureau of Labor Statistics (BLS). The data is well below the 165,000 expected by economists and far from the 200,000-plus figures seen after the pandemic. To make matters worse, the July data, which was particularly weak and raised fears of a recession in markets, is revised down from 114,000 to 89,000. Even though the unemployment rate is down a tenth from the previous month to 4.2%, the general feeling of weakness is putting more pressure on the Federal Reserve, so its first interest rate cut, at the September meeting, is 50 basis points (a “huge” cutout as American analysts say) and not 25, the standard move. Recently, the central bank said it was once again more concerned about the deterioration of the labor market than about controlling inflation and these data tip the balance a little more.
The data released this week, which usually serve as an appetizer for the official employment report, confirmed the gradual cooling of the labor market. job offers -collected in the JOLTS survey- fell to 7.67 million in July (the lowest level since January 2021) from the expected eight million and to 7.91 million in June, a revised figure from 8.18 million. In the same BLS report, the layoff rate It increased by 0.1 percentage points to 1.1%. On the other hand, even if the resignation rate rose 0.1 percentage points to 2.1%, remaining on a well-established downward trend and close to its 2020 lows. The ratio of job openings to unemployed people declined to 1.1, from a high of 2 in 2022. Other alternative indicators of more timely employment. openings suggest that labor demand continued to slow in August. The LinkUp series was broadly flat in June and July, but declined in August. The Indeed series was flat.
On the other hand, the ADP Payroll Processor Monthly Survey showed 99,000 private jobs added in August, well below the 144,000 expected and the 111,000 in July (also revised from 122,000). While the ADP report has not always shown the same momentum as the official employment report, its weak data has economists on guard.
These measures, for the moment, They also telegraph a normalization after the imbalance experienced by the pandemic than an early recession. “Employment has slowed, while layoffs remain relatively low and the rise in unemployment has been fueled by increasing participation in the labor market, mainly through immigration,” describe American analysts at the Swedish bank SEB.
That’s not to say that some economists, such as those at BCA Research, see this cooling as a prelude to the inevitable: “Ultimately, the continued slowdown in labor demand will lead to a recession turning point early 2025“However, other voices argue that this weakening is consistent with the Fed’s soft landing thesis (control of inflation without serious macroeconomic damage). In fact, the latest revision to GDP for the second quarter was upward and with a significant upward correction in consumptionthe real engine of the American economy, representing two-thirds of it. An important point will be what happens later when many citizens have completely exhausted their savings linked to the pandemic.
