A Big Slowdown in Hiring
Is a 235,000 increase in August nonfarm payrolls a disappointment? Yes, when the consensus forecast called for a 720,000 increase (WSJ).
- In July, the economy created over 1 million jobs.
Whether we should be concerned is a tough question to answer.
We saw a sharp slowdown in job growth in April. It turned out to be temporary.
Notably, restaurants and bars, which added 290,000 jobs in July, lost 42,000 in August.
- It’s surprising since restaurants/bars have been woefully understaffed.
Let’s include two other measures of the labor market.
- Job openings in June (latest data available) were at a record 10.1 million., per the U.S. BLS.
- Weekly first-time claims for unemployment insurance (the first time someone files after a layoff) fell to a pandemic low of 340,000 as of August 28, according to the Dept of Labor.
While the Delta variant is a big health concern, other indicators of the labor market suggest it has yet to influence the broader economy.
Let’s be careful extrapolating a trend from one month of data.
Successful investors are leery of putting too much weight on one economic report. Instead, they maintain a long-term, disciplined approach.