The Bureau of Labor Statistics reported the numbers for August this morning in the employment situation report. There are many significant changes so let’s dig right into it.
Nonfarms payrolls increased by 96k, well below July’s gains of 163k. This is a very weak reading, and a mile and a half below the 201k forecast from yesterday’s ADP employment report.
Despite the weakness in nonfarm payrolls, the unemployment rate (U-3) fell to 8.1% from 8.3%, and the real unemployment rate (U-6) dropped to 14.7% from 15.0% a month ago.
So what gives? The labor force participation rate, that’s what. The August labor force participation rate was down to 63.5%, from 63.7% in July.
This 0.2% is a huge decrease. With a civilian labor force of 154.6 million, a 0.2% fall in the labor force participation rate means 309k less people looking for work. Remember we only added 96k jobs this month, so the labor force figures are having a much greater impact on the unemployment rate than economic health.
Many baby boomers are of course retiring, but it should not be ignored that many others who are “retiring” are simply discouraged workers who have given up.
The reduction in the labor force participation rate brings the employment-population ratio down to 58.3%, from 58.4% in July. Again, 0.1% is not insignificant given scale here.
The “mancession” has essentially come to an end, until recently anyway. Over the last decade or so, the unemployment rates of the sexes were mostly in-line.
But a housing bubble in 2008 left many in the construction industry out of work, giving birth to the “mancession.” The unemployment rate for men peaked in October of 2009 at 11.2%, and while women were also struggling, their unemployment rate was a much less severe 8.7%.
In January the rates had converged though, with both men and women experiencing 8.3% unemployment. Since then, the jobs have shifted into women’s favor once again.
The unemployment rate for men fell to 8.3% in August from 8.4% in July, but the unemployment rate for women plummeted to 7.8% from 8.1% a month ago. So either women are dropping out of the labor force at a much faster rate, or blue-collar job growth has stagnated and pink-collar jobs are paving the road to economic growth.
The unemployment rate for 3 of the 4 calculated races fell August:
- The unemployment rate for whites fell to 7.2%, from 7.4% in July.
- The unemployment rate for blacks was unchanged from July at 14.1%. Blacks have historically held a higher unemployment rate than the other races by a wide margin. The recession does not seem to have lessened or worsened that in any specific way.
- The unemployment rate for Asians fell to 5.9%, from 6.2% in July.
- The unemployment rate for Hispanics fell to 10.2%, from 10.3% in July.
Finally, we see some interesting news this month in the education spread of those 25 years and older.
- The unemployment rate for those with less than a high school diploma fell steeply to 12.0% from 12.7% in July.
- The unemployment rate for those with a high school diploma but no college rose to 8.8% from 8.7% in July.
- The unemployment rate for those with some college or an associate’s degree fell sharply to 6.6% from 7.1% in July.
- The unemployment rate for those with a Bachelor’s degree or higher was unchanged at 4.1%.
In May, the unemployment rate for those with a high school diploma but no college was 8.1%, while the rate for those with some college or an associate’s degree was 7.9%. Since then, we have seen a strong divergence.
That 8.1% and 7.9% has turned into 8.8% and 6.6%, indicating that a little bit of college is starting to go a long way.
All in all, a mostly weak report masked in optimism by an aging population.