The August employment report showed the US economy added 1.37 million jobs, modestly below expectations. Despite the decline in the unemployment rate to 8.4%, analysts at Wells Fargo see signs the jobs recovery is slowing.
“The jobs market continues to slowly heal, with employers adding 1.37 million jobs in August. That marked a slowdown from prior months, however, and is another indication that the recovery is losing momentum after the initial burst of activity from re-opening.”
“The headline overstates the underlying strength of labor demand, as 238K workers were temporarily hired for the 2020 Census. Private employment rose by 1.03 million, down from an average of 2.4 million the prior three months.”
“In ordinary times, a 1.37 million gain in payrolls would be considered substantial, but of course these are no ordinary times. Payrolls remain 11.5 million below their February level, with still under half of the jobs lost recovered. An increasing share of the jobs lost since the start of the pandemic have become permanent.”
“As fewer workers expect to be recalled, links to the labor market become more tenuous and the outlook for the recovery lengthens.”
“Despite the improvement in both participation and unemployment in August, as we head into a weekend that celebrates the American worker, the smallest share of the population is working since the mid-1970s.”