BridgeWorks
The Bureau of Labor Statistics released the August employment report yesterday, and it landed well above expectations: nonfarm payrolls rose 162,000, against a consensus forecast of roughly 53,000. The unemployment rate held at 4.1 percent, and labor force participation edged up to 61.6 percent.
Before anything else, the part that requires us to correct ourselves.
We told you July was a contraction. It was not.
On August 7 we published a post about the July jobs report built on the headline that payrolls had fallen by 23,000 — which we described as the first contraction in years. Yesterday's release revised that figure.
July was revised from −23,000 to +21,000, a swing of 44,000. June was revised up as well, from +20,000 to +31,000. Together, the two months were 55,000 better than first reported.
So the contraction we wrote about did not happen. We also leaned on that number in our piece on frozen hiring, and it colored how we characterized the market in the weeks after. The direction of that reporting was too gloomy, and the correction belongs at the top of this post rather than buried at the bottom.
Two honest observations about how we got there. First, monthly payroll figures are estimates from a survey and are revised twice by design; treating any single month as a verdict is a mistake we should not repeat, and we will be more careful about the word "contraction" when a first print is all we have. Second, this partly vindicates a claim we pushed back on. When Chair Warsh said at Jackson Hole that labor markets were "consistent with full employment," we noted the tension with the payroll data. He was reading a stronger series than the one we had.
What August actually shows
The gains were concentrated, and where they landed matters as much as the total:
- Food services and drinking places: +59,000 — by far the largest contributor
- Local government education: +42,000 — largely the seasonal return of school staff
- Construction: +22,000
- Manufacturing: +16,000
- Health care: +13,000
- Information: −23,000 — including computing infrastructure, publishing, and broadcasting
That is a real number and a soft composition. More than half the total comes from restaurants and the school-year staffing cycle. Those are genuine jobs and they matter to the people who hold them, but they are not the same signal as broad-based expansion across higher-wage sectors.
The information sector losses run the other way and are worth watching closely. Declines concentrated in computing infrastructure, publishing, and broadcasting are consistent with what a lot of employers are saying out loud about automation changing headcount in white-collar and technical roles.
The number nobody leads with
Average hourly earnings rose 0.3 percent for the month and 3.1 percent over the year. Consumer prices have been running around 3.4 percent.
Which means that even in a month with strong hiring, the typical worker's wages are not quite keeping pace with prices. That is the reconciliation between a good jobs report and a household that does not feel it. Both are true. Employment is holding up; purchasing power is slipping slightly. It is also why the Fed's focus on inflation, however unwelcome for job seekers, is not disconnected from what workers experience.
What this changes for a job search
Genuinely better news than we expected, with the emphasis on genuinely and on than we expected:
- The door is open wider than we said last month. If you paused a search on the belief that the market was contracting, that premise was wrong. Restart it.
- Follow the composition. Hiring is strongest in food service, health care, construction, and skilled trades. Our construction program sits squarely in one of the categories still adding jobs.
- Treat single months skeptically — including this one. August could be revised down. The trend across several months is the signal; one print is noise, which is exactly the lesson we are taking from our own error.
Where we land
A month ago we described a labor market that was freezing. The revised data describes one that is grinding along unevenly — better than we said, still not generous, and still leaving wages a step behind prices. We would rather correct that in public than quietly change our framing and hope nobody noticed. The next report lands in early October, and we will read it with more patience than we read the last one.
