August Unemployment Ticks Down, Yet Payrolls Is Huge Disappointment

The Labor Department has released its highly anticipated report on the employment situation for August. With this being one of the last reports ahead of the key presidential election and with the stimulus packages aimed at saving economies, all eyes are on this number. The official unemployment rate for August was down to 8.1% versus 8.3% in July. Bloomberg was calling for 8.3%. The change in nonfarm payrolls was a disappointing 96,000. The labor force participation rate is the reason for the drop in unemployment, and the news on a retroactive basis looks bad on the revisions.

Dow Jones was calling for 125,000 in nonfarm payrolls and an unemployment rate of 8.3%. Bloomberg was calling for 125,000 in nonfarm payrolls. We would note that there was likely a higher unofficial estimate due to the ADP payrolls data yesterday showing that more than 200,000 private sector payrolls were added.

The report has some added disappointment in it. July and June payroll numbers were revised lower after some unexpectedly higher gains were initially projected last month. July payrolls were shown to have grown by 141,000 versus the initial figure of 163,000 and June was revised down to only 45,000 payrolls versus a prior report of 64,000.

JON C. OGG