The Labor Department will release the latest hiring and unemployment figures at 8:30 a.m. Eastern time. The monthly report provides one of the better snapshots of the state of the American economy. Here’s what to watch for:
• Wall Street analysts expect that 180,000 jobs were created in August, less than the previous month’s unexpectedly strong 209,000 gain but still in line with what’s considered a healthy job market. (Hurricane Harvey will not affect the August report because the data was collected well before the storm hit.)
• Unemployment is expected to remain flat, at 4.3 percent. If it falls, it’ll be at the lowest rate since February 2001.
• Average hourly earnings are expected to rise by 0.2 percent from July. Even as hiring has picked up in recent years and the unemployment rate has dropped, wages have remained relatively stagnant. That means an improvement in hourly earnings could be a further sign of a strengthening economy.
A Possible Return to the Norm
In April, June and July, employers added more than 200,000 jobs per month, a level that’s considered strong given the low unemployment rate as well as the age of the current recovery, which started more than eight years ago.
Given that strength, many economists expect to see hiring experience what’s called a reversion to mean — a return to a level close to the average monthly gain of about 180,000 jobs that we have seen over the past year.
If they’re right, and hiring does dip, it won’t necessarily be a sign of economic weakness. Michael Gapen, chief United States economist at Barclays, notes that August has historically been a soft month for job creation. In four of the last five years, the August payroll figure has come in below expectations, only to be revised up in subsequent months.
Coming Back to the Work Force
Despite steady hiring and the low unemployment rate, the proportion of the population in the work force has been stuck at just under 63 percent, a level that hasn’t been plumbed in decades. A rise in the so-called participation rate in August would suggest the strong job market is luring back workers sidelined in the recession and the initial years of the recovery.
If the participation rate does go up, it could raise the unemployment rate, but that would actually be considered good news as more people working — or looking for work — makes for a stronger economy over all.
More workers re-entering the labor market would also suggest there are still plenty of people out there who want to work but who have been discouraged by slim pickings or low wages — a phenomenon that economists refer to as slack.
A Raise, Finally?
Speaking of pay, one economic mystery lately has been the failure of wages to increase. Different theories have been suggested, including that automation and new technologies may have begun to fundamentally alter the way we work. But there seems to be little consensus about the cause of the stagnation.
If analyst expectations for August are right, and wages jumped 0.2 percent, that would leave the 12-month increase at 2.6 percent — a decent amount but hardly spectacular. A bigger rise than that would imply the tight labor market is finally forcing employers to raise salaries in order to attract new workers and keep the ones they have happy.
A gain of more than 0.3 percent — July’s increase — would also catch Wall Street’s attention. Traders worry that faster wage growth will prompt the Federal Reserve to raise interest rates more quickly — and undercut corporate profits as companies are forced to spend more on salaries.
Factories Are Humming
In Pennsylvania’s Lehigh Valley, where vanished giants like Bethlehem Steel once employed thousands of workers who turned hot metal into finished steel, Mack Truck is at least one company that is hiring.
Mack has had a presence in the area since 1905, when the brothers behind the company moved truck production to Allentown from Brooklyn, where the company was founded in 1900. But employment at Mack, which is owned by Sweden’s Volvo Group, fluctuates with truck sales.
The number of workers at its factory in Macungie, Pa., dropped to 1,287 in 2016 from 1,875 the year before as demand for new trucks fell. But the market is looking stronger now, and the factory now employs 1,800 people.
Mack’s story underscores the broader rebound in the manufacturing sector, which lost more than 2 million jobs in the last recession, but has partially clawed its way back since then. Factories added 70,000 workers to their payrolls so far in 2017, and economists will be watching to see if the trend continued in August.