The BLS Employment Situation Report for August showed that the US job market continued to recover from the impact of the COVID19 pandemic with the unemployment rate for August, as measured in the household survey, declining by 1.8 percentage points to reach 8.4%, which is still above by 4.9 percentage points over its pre-crisis level but much better than the Consensus estimate of 9.8%. The number of unemployed persons fell by 2.8 million to 13.6 million. For its part, the establishment survey showed that 1.4 million non farm payrolls were added during the month bringing the number of total employed people in the United States to 147.4 million of which 122.4 million were full time employed and 25.0 million were part time employed. However out of these 1.4 million additional recorded payrolls, employment in government increased by 344,000 in August, accounting for one quarter of the monthly gain and reflecting the hiring of 238,000 temporary 2020 Census workers.
Both the household and the establishment surveys that compose the employment situation report for August released on Friday, September 4 contain some interesting information on the shape of the recovery in the US labor market.
Main conclusions from the household survey
The unemployment rate came at 8.4%, which is still 4.9 percentage points over its pre-crisis level but much better than the 9.8% figure that has been expected by the Consensus. The number of unemployed Americans was reduced by about 2.8 million, from 16.3 million in July to 13.5 million in August. The number of unemployed for less than 15 weeks came down by around 3 million. This includes inter allia a large proportion of the workers temporarily furloughed during the initial months following the outbreak of the COVID19 pandemic. In sharp contrast, the number of unemployed for 15 weeks or longer stayed almost at the same level in July and in August. In a related way, the number of permanent job losers increased by 534.000 to 3.4 million (this measure has risen by 2.1 million since February). In addition, the number of involuntary part-time workers decreased by 1.1 million but it still remains 3.3 million higher above its pre-crisis level. Another interesting outline from the household survey: about 5.2 million persons not in the labor force in August were prevented from looking for work due to the pandemic (down from 6.5 million in July). Adding all these persons to the unemployed would significantly increase the actual unemployment rate, bringing it above the official U-6 unemployment rate of 14.2%.
Main conclusions from the establishment survey
Non Farm Payrolls increased by a whopping 1.37 million in August. But private payrolls increased only by 984 thousands. A quarter of payrolls was related to Government jobs of which
As a result, we can observe that the recovery of the job market presents an interesting fork-like shape with one branch of the fork representing temporary unemployment that is being gradually reduced as a result of the return to normality although some geographies and sectors are still behind the curve. The other branch of the fork represent the longer more permanent category of unemployed. The risk is that the recession will leave a lasting scar on the labor market by preventing longer unemployed persons from finding a job. In any case, for this category (and for a portion of the former) domestic demand will have to rebound sharply in order to support more jobs creations and a faster labor market recovery.
Weekly initial jobless claims plateau at the 1 million level.
The publication of the BLS employment report for August came two days after a release by the Department of Labor of weekly initial jobless claims plateauing around the 1 million mark. This is the latest indication showing that the recovery in the US job market has been losing pace as of late.