Is this the clear double-dip signal we have feared? Maybe, but it depends on which of the government's surveys you believe.
One thing's for sure: employers must not have much faith in the U.S. recovery. They're clearly not in hiring mode, as precisely zero jobs were added to the economy in August. The unemployment rate remained unchanged at 9.1%, according to the Bureau of Labor Services. Is the situation as bad as it looks? Possibly, but as we've seen over the past year, the severity of the hiring drought depends on which of the government's surveys you believe.
The Bad: The "Establishment Data"
The BLS survey that asks employers how many jobs they've added or shed during the month is the one that reported zero net jobs created in August. But the private sector actually added a handful of jobs: 17,000. That's the fewest since the labor market began to improve in early 2010. The government, on the other hand, continued to bleed jobs, shedding the same number, which resulted in the goose egg. Here's a chart showing the labor market's progress since 2010:
The news is actually worse than just the zero overall job growth for August: BLS also revised down the number of jobs created in July and June. Their totals went from 117,000 and 46,000 to 85,000 and 20,000, respectively. So not only was job creation nonexistent in August, but it was even weaker than we thought in the two months prior.
As you might have expected, most didn't do too well. In fact, a few that had been adding jobs went negative in August. Manufacturing and retail stand out here. In August they lost 3,000 and 7,800 jobs, respectively. But in July manufacturing added 36,000 jobs, while retail added 26,400 jobs. That's a pretty significant one-month reversal.
The Slightly Less Bad News: "Household Data"
The BLS's other survey asks Americans whether or not they're employed. The labor market's performance by this measure wasn't great, but it was certainly better than we saw in the Establishment Data. First, here's the chart for the unemployment rate:
Steady at 9.1% is hardly anything to celebrate. But each month, the U.S. must add jobs to keep that rate from rising, due to population growth. So why didn't it tick up in August since if no jobs were added? According to this survey jobs were added. It shows 331,000 more workers employed in August than in July.
Meanwhile, however, the number of unemployed Americans also rose by 36,000. How could both numbers rise? In August, 165,000 people entered the workforce from the sidelines. That's in addition to the 200,000 added by population growth.
So according to this survey, August wasn't nearly as terrible as zero new jobs implies. Instead, it says that the U.S. added 331,000 more employed Americans and labor market participation rose. This kept the unemployment rate steady. As you might guess, this shifted down the number of discouraged or otherwise marginally attached workers during the month:
One interesting result was how the unemployed population breaks down into duration groups. Here's the chart:
The big uptick in August came from the 15 to 26 week group. This might seem random, but if you have followed the economy over the past few months, it shouldn't. The economy began to weaken in April. Anyone who became unemployed in April or May and still hasn't found a job would be inflating the size of this duration bucket. The earlier two buckets remained unchanged, while the number of long-term unemployed fell a bit.
Finally, how did the broadest measure of underemployment fare in August? Not particularly well: "U-6," the unemployed plus those marginally attached to the workforce or working part-time for economic reasons, rose slightly to 16.2% from 16.1%. This is a little surprising considering that we saw the number of discouraged workers decline and employment rise. So this implies that some of the jobs added in August were part-time, though those newly employed Americans would have preferred full-time work.
What Does It All Mean?
Considering the truly awful Establishment Data result of zero new jobs in August, finding much optimism in this report is tough. It's possible that the other survey, which indicated a better result, is more accurate. But in either case, the labor market certainly isn't in a healthy state of expansion.
At best we're continuing to see stagnant hiring, with a labor market recovery remaining elusive. At worst, we're seeing the early signs of a double dip. We'll have to watch to see whether consumers pull back and employers begin laying off workers more broadly over the next few months to know for sure.