In August, total nonfarm employment increased by 142,000 jobs, with the unemployment rate remaining steady at 4.2%, according to US Department of Labor data. The Bureau of Labor Statistics reports showed that social assistance employment continued to rise (+13,000) but grew at a slower pace compared to the average monthly gains over the past twelve months (+21,000). At the same time, individual and family services added 18,000 jobs during the month.
In contrast, the manufacturing sector saw a decline in employment by 24,000 jobs, reflecting a decrease of 25,000 jobs in the durable goods industries. Despite this decline, employment in the manufacturing sector changed little over the course of the year.
Employment has not seen significant changes in most other major industries, including mining, quarrying, oil and gas extraction, wholesale, retail, transportation and storage, information, financial activities, professional and commercial services, entertainment and hospitality, other services, and government.
On the wage front, average hourly earnings for all workers in the non-farm private sector rose 14 cents, or 0.4%, to $35.21 in August. Over the past twelve months, average hourly earnings have increased by 3.8%. The average hourly wage for production and non-supervisory workers increased by 11 cents, or 0.4%, to $30.27.
The average working week for all non-farm private sector workers saw an increase of 0.1 hours to 34.3 hours in August. In the manufacturing sector, the average workweek remained steady at 40.0 hours, while overtime increased by 0.1 hours to 3.0 hours. The average working week for productive and non-supervisory workers in the private sector remained at 33.7 hours.
On the other hand, the June employment figures were revised downwards by 61,000 jobs, from +179,000 to +118,000, and the July figures were revised downwards by 25,000 jobs, from +114,000 to +89,000.
The Importance of NAMA Employment Data
Nonfarm employment is often referred to as the nonfarm employment change, a critical economic indicator released by the United States Bureau of Labor Statistics in its monthly employment status report. This report provides insights into public health and labor market direction in the US.
Key points related to employment in non-agricultural sectors include:
Definition: Nonfarm employment represents the total number of paid workers in the United States excluding farm workers, government employees, private household employees, and employees of nonprofits.
Important: Nonfarm payroll data is closely monitored by economists, policymakers, investors, and the public as it reflects the number of jobs added or lost in the economy outside the agricultural sector. It is considered a key indicator of economic health and can affect market movements.
Impact on markets: Significant changes in nonfarm payrolls can affect various financial markets, including stocks, bonds, and the value of the US dollar. Positive growth in nonfarm payrolls is generally seen as a sign of economic strength, while declines may indicate weakness..
Trends and analysis: Analysts often assess trends in nonfarm payroll employment to gauge labor market strength, predict future economic conditions, and inform monetary policy decisions.
Relationship to unemployment rate: Nonfarm payroll data is closely related to the overall unemployment rate. An increase in nonfarm employment is often associated with a decrease in the unemployment rate, while a decrease in non-farm employment may lead to an increase in unemployment.
Policy influence: Policymakers, including the Fed, use nonfarm payroll data as part of decision-making regarding interest rates and other economic policies.
Overall, nonfarm payroll employment data is a vital component of understanding the performance of the U.S. labor market and is a key factor in assessing the health and direction of the country’s economy..
Nonfarm payrolls: a comprehensive index of the US labor market
The Nonfarm Payrolls (NFP) report is a comprehensive overview of employment trends in the US economy. It contains several components that provide insights into the labor market, economic activity, and potential inflationary pressures. Here’s what is typically included in the NP report:
1. Non-farm payroll recruitment
– The headline figure represents the net change in the number of non-farm payrolls compared to the previous month. It excludes farm workers, employees of private households and employees of non-profit organizations. This figure shows whether employment is expanding or contracting, and serves as a crucial indicator of economic growth.
2. Unemployment rate
– The unemployment rate is calculated as a percentage of the unemployed labor force but actively looking for work. This is a key measure of understanding the number of unemployed people and refers to labor market conditions in general.
3. Labor Force Participation Rate
– This measures the percentage of the working-age population who work or are actively looking for work. It provides insight into workforce participation and can help determine whether people are withdrawing from the workforce.
4. Average hourly earnings
– This figure tracks changes in wage growth over time. Higher wages can indicate an increase in workers’ purchasing power, which may boost consumer spending but can also lead to inflationary pressures.
5. Average working week (hours worked)
– The report also includes the average number of hours worked per week across industries. Changes in this figure could indicate shifts in labor demand
6. Details by Sector
– The report provides a breakdown of changes in employment by sector, such as:
-Manufacturing
-Construction
– Professional and commercial services
– Healthcare
– Retail trade
-education
– Government (public sector)
This breakdown helps traders identify sectors that drive job growth or contraction.
