US non-farm payrolls rise by a bit less than expected in August

US non-farm payrolls rose by a bit less than expected last month, but unemployment undershot economists' forecasts by a wide margin.

According to the US Department of Labor, hiring in the States slowed from a 1.734m pace in July to 1.371m in August.

Last month's print was less than the 1.518m rise that economists had penciled-in.

Combined, non-farm payrolls figures for the preceding two months were revised down by 39,000.

The US unemployment rate on the other hand fell far more sharply than anticipated, from 10.2% for July to 8.4% last month (consensus: 9.9%).

Estimates for non-farm payrolls and the unemployment rate are derived from two separate surveys, the Establishment and Household surveys, respectively, but tend to converge over time.

To take note of as well, the non-farm payrolls numbers for August were flattered by the hiring of 238,000 field workers for the 2020 census, as Andrew Hunter at Capital Economics pointed out.

In parallel, the labour force participating rate improved by three tenths of a percentage point to 61.7%.

Driving the unemployment rate lower, employment jumped by 3.76m last month, even as the size of the labour fource grew by almost one million.

The latter, said Hunter "could be a sign that the expiry of enhanced unemployment benefits at the start of the month convinced some claimants to resume looking for work but, judging by that employment figure, the expiry of those benefits hasn’t done much so far to weigh on demand.

"Employment growth is still set to lag the recovery in broader economic activity over the coming months given its greater exposure to the services sectors worst affected by the pandemic. Nevertheless, the August data illustrate that, despite the earlier surge in virus cases and more recent fading of fiscal support, the recovery continues to plough on."

Ian Shepherdson at Pantheon Macroeconomics was far more reserved on the outlook, labelling the slowdown in private sector job growth "ominous", despite having been flagged by recent Homebase and weekly jobless claims data.

"The loss of momentum is consistent with other near-real-time indicators, and we see little chance of a quick re-acceleration," he said.

He also called attention to the 0.4% month-on-month jump in hourly earnings (consensus: 0.0%), saying the figures were "meaningless" because they did not account for the loss of low-paid jobs and were thus skewed.

"On a mix-adjusted basis, we expect to see downward pressure on wage growth for the foreseeable future."

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