Employment Update: August 2014

Numbers for August, released by the Bureau of Labor Statistics yesterday (link), produced an interesting mix of reaction. Some observers deplored the results, some suggested that BLS hadn’t gotten them right, yet others pointed out that uneven performance of this indicator is a normal phenomenon.

The BLS reported that 142,000 jobs were created in August. Those who expected at least 200,000 were disappointed. At the same time, BLS also revised July results downward from 209,000 to 181,000, a loss of 28,000 jobs. Therefore the net gain in August was just 114,000 jobs.

The Retail sector lost 8,400 jobs—once more underlining that consumer confidence may not be as robust as assumed. The Information sector (read communications media) lost 3,000. Manufacturing employment remained unchanged from July. Mining and Construction both produced fewer jobs than in July. The pattern is familiar by now. The basic industries are still sluggish. All the gains are coming from the Service categories.

Herewith the monthly chart, with July colored tan to indicate that results for the month were revised downward:

Data showing annual results and an annualized projection for 2014 are next:

Last month the 2014 projection was 2.774 million for the year. This month the projection has dropped to 2.598 million because of the July changes and the lackluster August results. The projection for 2014, however, still remains the best since 2007.

In May of this year, the economy recovered the loss of 8.663 million jobs lost in the Great Recession. Since then I’ve been tracking recovery of new jobs not created while we were making up losses. To keep up with the growth in the workforce, a number driven by demographics, we need to create 87,300 jobs every month. Once that number is met, anything in excess may be counted against what I’ve labeled the Growth Deficit. That number stood at 6.635 million in April, just before we erased the losses created by the Great Recession.

As of July, we had already recovered 7.1 percent of that deficit. The numbers were good enough in August to change that recovery rate to 8.9 percent, as shown in the last graphic:

The trend is still positive, but some kind of “new normal” seems to try to deny the eager observers of the economy the triumphant feeling that we’re heading for what we really like: “irrational exuberance.”