The US Job Market Is Giving Us Whiplash

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The US job market delivered a surprisingly strong August. Employers added far more jobs than economists expected, while unemployment remained steady. But is the labor market booming?

Not quite, according to Alicia Wallace at CNN:

• The US added 162,000 jobs in August, according to data from the Bureau of Labor Statistics. That’s more than double the 65,000 economists expected and the strongest monthly gain since March. Meanwhile, the unemployment rate held at 4.1%.
• 162,000 sounds impressive, but it’s also the latest figure in a series of “whiplash” months where jobs have rocketed from huge gains to huge losses. The choppiness has been driven by everything from extreme weather and labor strikes to changing hiring patterns, demographics, technology, and broader economic conditions.
• Beneath the headline numbers, wage growth slowed to a five-year low of 3.1%, trailing inflation for four consecutive months. 43% of unemployed workers have also been looking for work for at least 15 weeks– the highest in five years.

Our take? August’s numbers are encouraging, but this year’s whiplash makes it difficult to know how much weight to put on any single jobs report. And that uncertainty matters beyond the labor market: following the August jobs report, expectations that the Federal Reserve has room to raise interest rates later this month increased.

When the numbers are this choppy, one surprisingly good– or bad– report can move markets before we know whether it represents a genuine change in that direction.

P.S. We will politely refrain here from getting into the related topic of whether government-reported statistics are as reliable as they once were (though you can see our earlier take in Flying Blind in Uncertain Skies and an MIT professor’s more recent take here).