UNITED STATES — The 156,000 increase in jobs in August was smaller-than-expected —and more-so when including 41k worth of downward revisions to the two prior monthly estimates, reported RBC Financial Group.
Looking through monthly volatility, year-over-year employment growth hit its lowest level since mid-2013 in August.
Employment growth has long been expected to slow, though, reported RBC, as the slack in labor markets is absorbed. By most estimates, even the recent pace would be sufficient to further tighten labor markets over time.
The unemployment rate did tick higher in August but to a 4.4 percent rate that is still below the Fed’s estimate of its long-run full-employmen’ level. The rate is still down half a point from a year ago and twice that when including sources of hidden unemployment like discouraged workers.
More concerning to fed officials than slower job growth is likely to be the stalling out of wage growth year-to-date in 2017, reported RBC.
Despite ostensibly tighter labor markets, wage growth has been stuck at 2.5 percent over the last five months, similar to the 2.6 percent average increase last year.
The lack of further acceleration in wages coupled with a lack of inflation pressures continues to provide the fed with flexibility around the pace of monetary policy tightening despite what historically would look like relatively tight labor markets.
Source: RBC Financial Group press release