US Payrolls Up Less Than Forecast As Annual Trend Steadies

Companies added 165,000 workers last month, the US Labor Department reports.The gain was modestly below Econoday.com’s consensus forecast. But the year-over-year trend held steady in August, suggesting that the two-year slowdown that began in the first half of 2015 may be stabilizing at a lesser-but-still healthy growth rate.

From the perspective of this week’s ADP Employment Report, a private estimate of monthly changes in the labor market, today’s government data looks disappointing. By ADP’s reckoning, company payrolls increased by a seasonally adjusted 237,000 last month – the strongest monthly gain for this series since March.

The Labor Department’s numbers reflect a much softer advance for August, but both data sets agree on at least one key point: the annual pace of growth for private employment appears to be stabilizing after two years of deceleration.

According to today’s numbers from Washington, US payrolls grew 1.7% in August vs. the year-earlier level, unchanged from July’s pace. (Actually, the August increase was a tick faster at 1.71%, fractionally above July’s 1.69% advance.) That’s roughly the average annual rate of growth posted so far this year via the monthly updates to date — a sign that the labor market’s expansion may hold at or near this rate for the foreseeable future.

Yesterday’s weekly update on initial jobless claims also offers support for thinking positively. New filings for unemployment benefits ticked higher last week, but remain close to a multi-decade low. Note, too, that claims continue to fall on a year-over-year basis, a bullish signal for the labor market.

Challenger, Gray & Christmas’ monthly estimate of job cuts corroborates the upbeat claims data. “Although job cuts have risen this month, they continue to be significantly lower compared to the same time last year,” the consultancy’s chief executive officer, John Challenger, said in yesterday’s August update.