Economy Watch: August Jobs, Non-Manufacturing Business Activity

While August BLS data showed only 142,000 jobs created for the month, the latest Non-Manufacturing ISM Report on Business found that the service sector grew for the 55th month in a row.

The U.S. economy created 142,000 jobs in August, according to the Bureau of Labor Statistics on Friday, down somewhat from the stronger gains of the last 12 months, which have averaged 212,000 per month. Even so, there was job growth in professional and business services, and healthcare, in August.

The change in total employment for June was revised from a gain of 298,000 downward to 267,000, while the change for July was revised from an increase of 209,000 to 212,000. With these revisions, the rise in employment in June and July came in 28,000 less than previously reported. The official U.S. unemployment rate for August, which is calculated by the BLS using a separate survey from the number of jobs, came in at 6.1 percent.

On Thursday, ahead of the jobs report, the U.S. Department of Labor reported that for the week ending August 30, initial unemployment claims came in at an annualized rate of 302,000, an increase of 4,000 from the previous week. The four-week moving average was 302,750, an increase of 3,000 from the previous week.

Service Sector Continues to Grow

Economic activity in the non-manufacturing sector grew in August for the 55th month in the row, according to the latest Non-Manufacturing ISM Report On Business, published by the Institute for Supply Management. The non-manufacturing index came in at 59.6 percent in August, 0.9 percentage points higher than in July. In fact, the August reading is the highest for the composite index since its inception in January 2008.

The Non-Manufacturing Business Activity Index increased to 65 percent, which is 2.6 percentage points higher than the July, and the highest reading for the index since December 2004, when it also registered 65 percent. The New Orders Index came in at 63.8 percent, 1.1 percentage points lower than in July. The Employment Index increased 1.1 percentage points to 57.1 percent.

According to the report, 15 U.S. non-manufacturing industries reported growth in August. Respondents’ comments varied by business and industry, but the majority of of them reflected continued optimism. Some respondents believe there may be some tapering off in the recent strong rate of growth in the non-manufacturing sector, however.

Wall Street was in positive territory most of the day on Thursday, but ended down, with the Dow Jones Industrial Average off 8.7 points, or 0.05 percent. The S&P 500 and the Nasdaq lost 0.15 percent and 0.22 percent, respectively.