August 2024 Payroll Insights: Job Market Resilience Amid Economic Adjustments

[Sanjeev Advani]

August 2024 payroll numbers continue to show a resilient job market, despite revisions expected to push the data higher, following a trend seen in previous years. Economists note that job growth in typically underreported industries fell by 42,000 compared to the 6-month average, suggesting August’s numbers may understate actual gains.

Key Employment Gains

• Construction: +34,000 jobs, driven by heavy civil engineering and nonresidential trade contractors.
• Healthcare: +31,000 jobs, though slower than the past year's monthly average of 60,000.
• Social Assistance: +13,000 jobs, with more modest growth compared to previous months.
• Other growing sectors include financial activities, wholesale trade, and government (+24,000 jobs).

Job Losses and Sector Struggles

• Manufacturing: -24,000 jobs.
• Retail: -11,100 jobs.
• Temporary help employment continues to shrink, reflecting business uncertainty.

Wage and Fed Policy Implications

Wages rose by 0.4% in August, up 3.8% year-over-year, supporting a cautious approach by the Federal Reserve on deeper rate cuts. A 25 basis point cut is likely, with a 75% probability, as the Fed weighs solid wage growth and labor market strength.

Part-Time Employment & Immigration Impact

Part-time employment surged by 264,000, reflecting business caution. Meanwhile, the U.S. needs 145,000-200,000 new jobs each month to keep up with population growth, spurred by increased immigration.

Conclusion

While job market momentum has slowed, it's not breaking. The August report underscores a resilient economy, supported by wage growth and increasing work hours, signaling adaptability to changing dynamics as we look toward the Fed’s next move.