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September 1, 2017

Labor Day Jobs Report by Tom Cunningham

The Bureau of Labor Statistics today reported that the US economy added 156,000 jobs for the month of August, somewhat below the expected level of about 180,000. The headline unemployment number, U3, ticked up to 4.4% and the broadest measure of labor underutilization, U6, remained steady at 8.6%. Earnings continue to rise at a restrained rate of 2.5% over the last year. Manufacturing, construction, business services, health services and mining all showed decent job gains and all the other sectors were essentially flat.

It would have been nice to see some stronger numbers, but these aren’t bad and can be easily thought of as the result of a surprising strong July. That is, overall labor market conditions continue on an OK path of improvement, and this month’s marginal weakness can be attributed to simple statistical noise. Given that last quarter’s GDP growth was revised up last week with upward revisions to consumption, the noise explanation seems likely.

One final note appropriate for the labor day weekend: Job openings in the U.S. are at record levels – over 6 million reported open positions. We have a little over 7 million unemployed workers. Issues of skill and location mismatch are becoming increasingly critical. The appropriately skilled worker shortage is only going to become worse. Wage increases have not been particularly widespread, but it is hard to see how employers are going to cope with increasingly tight labor markets without a real change in their behavior. Facing a nationally tight labor market, our workforce development and ChooseATL efforts become super-critical!