Employment: Solid Gains But Hints of Deceleration

Bottom Line: Job gains were moderately stronger than expected in August, up 315k, but negative revisions to previously reported subtracted over 100k jobs from the overall tally. The unemployment rate rose 0.2% to 3.7% as the household survey showed an increase in the labor force of nearly 800k with just over 440k new jobs. Average hourly earnings rose slightly less than expected, and both earnings and hours worked were decelerating slightly on a trend basis. Finally, job gains were spread across every primary sector, roughly as expected, except for the education sector, which was slightly better than our expectations given the difficult seasonal adjustment with more schools starting earlier in August. Overall, this was a solid labor report, but it offered hints of deceleration. Given the Fed's focus on the strength of the labor market as a critical factor behind sustained inflation, this will offer some comfort that labor is cooling. Still, it won't likely be enough to change their near-term policy decisions.

Payroll Employment rose by 315k in August, compared with market expectations for an increase of 265k. The prior 2 months were revised, lower in July by 2k and lower in June by 105k.Government jobs ROSE by 7k. Consequently, private sector jobs ROSE by 308k.  Private education jobs rose by 6k. State and Local education jobs fell by -19k.Overall employment is now 4.0% ABOVE its year-ago level.  Over the past 12 months, 5,840k jobs have been created.In August, the job gains were in: