You’re going to see the usual “doom and gloom” today regarding the August jobs report released this morning.
Unemployment, nationally, went up .1% of a point. Why? Because more people re-entered the labor market a rate faster than the private sector could create jobs. What was the forecast (i.e. “market expectation”)?
The private sector is forecast to add a net total of only 41,000 jobs, the fewest since January, which isn’t enough to keep up with population growth.
What was the reality?
The Labor Department says companies added a net total 67,000 new jobs last month, down from July’s upwardly revised total of 107,000.
Yes, the unemployment rate raised as expected. However, it raised for the right reasons—people who had stopped looking for work began looking again because private sector job growth is beating expectations. While nobody (but partisan Republicans looking to capitalize on Americans’ frustration with a slow recovery) wants to see unemployment go up, it’s far better to see it go up because people who had given up looking for work are again as opposed to see a shrinking supply in jobs like we saw a year ago.
Remember that the July jobs report was supposed to be considered weak, even though it originally showed twice the growth in private sector hiring as the June report. Now, it’s been revised upward to over three times that factor.
Look, given the high number of non-employed Americans, it’s going to take time to see a true low unemployment figure. We have millions of underemployed/nonemployed Americans who aren’t reflected in the unemployment market reports. They will eventually re-enter the labor market, and the trick is that private sector hiring is going to have to keep pace with their re-entrance. But the important thing is that they are re-entering a labor market which is just barely unable to keep up with the pace of their re-entrance last month. That’s not exactly terrible news.
The real problem is these revisions get grossly overlooked. The nation added some 30,000 more private-sector jobs in July than was reported the last time the stock market got the vapors because the end of the census lead to a cumulative drop in the labor market.
We’ve seen private sector hiring re-add over three-quarters of a million jobs since it’s historical low in December 2009, and it continues to grow.
Is today’s August unemployment report great news? No, but we have to get the binary newscycle that anything that isn’t great must instead be terrible. This is actually pretty good news for the economy.