August jobs report could show another weak month for hiring

The federal government’s August jobs report is widely expected to show a continuation of this summer’s soft hiring numbers, just one month after the labor market contracted by 23,000 jobs. Ahead of the report’s release Friday at 8:30 a.m. ET, economists surveyed by Dow Jones expected overall hiring of 53,000 roles in August and the unemployment rate holding steady at 4.1%. If those predictions prove accurate, it would mark the third weakest month for overall hiring so far this year. Economists also expect anemic wage growth of 0.3% month-over-month and 3% on an annual basis. “We would not be surprised to see wage growth even softer,” wrote Citi’s Veronica Clark, whose overall wage expectations were in line with consensus. A slowing pace of wage growth would come at a difficult time for consumers, especially those in lower income tiers. The inflation rate in July was 3.4% from a year ago, but that was before energy prices started climbing again. On Thursday, the international crude oil benchmark Brent surpassed $97 per barrel before closing around $95. Since Aug. 4, the price of Brent has risen more than 20%. August inflation data won’t be released until Sept. 11. But any uptick from July would widen the gap between wage growth and rising prices. August is also a historically weak month for U.S. job growth. The August jobs report has fallen short of expectations in 11 of the last 16 years, according to analysts at Goldman Sachs. “Growth on average has been slow in each of the last couple summers,” wrote JPMorgan economist Abiel Reinhart in a Thursday note. “Private jobs have fallen in August in each of the last two years.” This August could look even worse. “Another consideration is the end of Temporary Protected Status for around 350,000 Haitians on July 27,” he wrote, “At which point any work permits obtained via this status were terminated.” Several private sector indicators ahead of Friday’s report also had economists and investors bracing for a weak number. ADP’s payroll report on Wednesday showed private employers tracked by the firm added only 38,000 positions in August. It also found that companies with over 500 employees added the lion’s share of roles in August — but that medium-sized firms did not add any jobs at all. “The labor market’s summer soft patch extended into August,” wrote Vanguard senior economist Adam Schickling. The firm estimated that only 8,000 jobs had been added in August, based on data from the 401(k) plans that it runs for millions of companies. “The slowdown appears to be concentrated in recruiting rather than workforce reductions,” he wrote. This leaves “new labor force entrants and those seeking employment facing the most difficult conditions.”