Piece of Work: Dissecting Labor Market Trends

The August jobs report confirms the labor market's continued slowdown, which is for now consistent with the Fed's soft-landing desires—but not without warning signs.

Just ahead of the Labor Day Weekend, which was glorious in our neck of the woods, was the monthly jobs report, released on Friday morning. It was also a sad day for Parrotheads everywhere when the news hit of the death of Jimmy Buffett, of whom I (Liz Ann) was a big fan. I had the pleasure of meeting him in 2008, and he was a true joy. The title of this report is in his memory.


In a sign of some renewed economic weakness, and marking the continuation of decelerating job growth, the Bureau of Labor Statistics (BLS) announced last Friday a headline payrolls increase of 187k. It was more than economists expected, but the rub was that the prior two months' revisions were -110k. The unemployment rate jumped 0.3% to 3.8%; but that was for a "good reason" as the labor force participation rate rose 0.2% (a 746k surge in the labor force) to 62.8% in another sign of a loosening of labor market conditions.

The BLS's household survey's job tally, from which the unemployment rate is calculated, jumped by 222k. As shown below, over the past 17 months (dating back to the first drop in this cycle in the household survey), the BLS's establishment survey (payrolls) suggests a much more robust labor market relative to the household survey. For what it's worth, the latter tends to lead the former heading into weaker economic environments.

Slowing job growth