Private-sector payrolls in America rose by 163K in August, according to new data from ADP. That was worse than expected and the smallest monthly gain since October 2017. The July figure was also revised lower, but the less volatile 3-month average pace of job creation still ended at 186K, well above the rate needed to keep up with U.S. population growth. At first glance the headline slowdown in job creation might seem discouraging but for now it is more likely a natural side-effect of a tight labor market where businesses want to add staff but have a challenge filling vacancies. Mark Zandi, chief economist of Moody’s Analytics, added that “The job market is hot. Employers are aggressively competing to hold onto their existing workers and to find new ones. Small businesses are struggling the most in this competition, as they increasingly can’t fill open positions.” Moreover, payrolls at firms with 1-49 workers rose by just 21K in August, the smallest monthly gain in almost a year.
Elsewhere, there were 38,472 corporate layoffs announced in America last month, according to a new report from Challenger, Gray & Christmas. That was a 41.8 percent increase from July and the 3rd-highest monthly total for announced layoffs 2018-to-date. John Challenger, chief executive officer of Challenger, Gray & Christmas, added that “August job cut announcements seem to indicate the summer lull is over. Companies are assessing global market conditions and adjusting staffing levels accordingly.” Retailers have been responsible for most of the job cuts announced this year, as the industry continues to face competition from online merchants (Amazon), but August’s uptick in layoffs appears to have been exacerbated by U.S. trade policy. Specifically, there was a jump in the number of companies attributing job cuts to tariffs last month, particularly in relation to tariffs on imported steel. More importantly, the headline print was a bit disappointing but overall total layoffs remain relatively low and announced hiring plans rose in August to a 6-month high. Technology firms are leading the way with job creation, as “people with coding, web and software development, and network security skills and experience are in high demand right now.”
Sources: Econoday, U.S. DoL, Challenger, Gray & Christmas, FRBSL
Post author: Charles Couch