• The media today are making a lot of noise about job numbers which showed zero job growth in the economy in August.  The job figures were certainly disappointing, but there are many factors affecting this figure.
• First, governments, particularly state and local governments, have been shedding jobs for the past 10 months typically at a rate of more than 30,000 jobs per month.  In August, the government workforce shrunk by half that, 17,000 jobs, and this was mostly at the local level.  State governments actually added 5,000 jobs in August.
• If the government workforce declined and there was no change to the total workforce, this means that the private sector added workers—17,000 of them in August.  This figure is smaller than the average job growth in recent months, but consider the context: markets plunged in August over debt anxiety and the S&P downgrade of the US credit rating.  Additionally, many Verizon workers, 45,000, who would typically have been on payrolls, were on strike and thus not counted.
• On the positive side, today’s figure marks the 18the consecutive month of private sector job growth, and as those 45,000 Verizon workers are added back to payrolls next month, expect that gain to continue.
• Still, there are reasons for concern.  Job growth remains below the 200,000 jobs per month needed to reduce the unemployment rate.  Additionally private hourly earnings declined by 3 cents or 0.1 percent in August while hours worked also declined by 0.1.  Over the year, hourly earnings are up 1.9 percent and hours worked are flat.  By comparison, consumer inflation in July was up 3.6 percent from one year ago, suggesting a decline in real wages.
• Some analysts are also concerned about the downward revision to total job growth for previous months.  June was revised down from 46,000 to 20,000—interestingly the initial estimate was for 18,000—and July was revised from 117,000 to 85,000.
• Looking closer however, June private sector job growth has been revised up from 57,000 to 75,000 while July private sector jobs have gone from 154,000 to 156,000.  These upward revisions to private sector growth and downward revisions to total growth mean that the private sector is growing faster than initially estimated while the government sector is shrinking faster than initially estimated, and highlight the difficulty of measuring the economy.
• One additional thought: the employment situation summary is concerned with net job growth.  Hidden below these figures are many hires and separations—job churn.  The BLS has a separate survey to measure these job flows though it takes a longer time to process this data, so the most recent information available is from July.  In 2011, through July, monthly separations have ranged from 3.3 to 3.8 million while monthly hires have ranged from 3.5 to 3.9 million.  To put these figures in context, a healthier job market has 4.5 to 5 million hires and separations each month.  In this light, as much as the economy is suffering from a lack of job creation, it seems that the lack of job churn, which moves workers to jobs where they will be most productive, is a problem that requires attention as well.

Weekly Forecast

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. For the full forecast from the latest Pending Home Sales release, click here (PDF).