How Many Jobs Were Created in August?

Did the U.S. economy create enough jobs for the Fed to raise interest rates?

The U.S. economy created a net of 173,000 jobs in August, according to the Bureau of Labor Statistics on Friday. That’s a lackluster report, and probably not going to help influence the Fed to raise interest rates later this month, especially since there’s still nervousness about the state of much of the rest of the world’s economy. On the other hand, the employment gains for June were revised from an increase of 231,000 to 245,000, and the change for July was revised from 215,000 to 245,000. With these revisions, employment gains during the two months combined were 44,000 more than previously reported. Over the past three months, job gains have averaged 221,000 per month, which is a reasonably healthy rate of growth, if not exceptional.

Some parts of the economy that drive office space absorption are still gaining jobs. For instance, financial activities employment increased by 19,000 in August, with job gains in real estate (up 8,000) and in securities, commodity contracts, and investments (up 5,000). Over the year, employment in financial activities has grown by 170,000. Employment in professional and business services also continued to trend up in August (seeing a gain of 33,000) and has increased by 641,000 over the last 12 months. Manufacturing and mining — which includes the energy industry — lost jobs. That affects office space usage in certain markets, the largest of which would be Houston, but overall isn’t a drag on the sector.

In August, the number of long-term unemployed (people jobless for 27 weeks or more) came in at 2.2 million, which wasn’t much of a move from the previous month. Even so, the number of people in that situation has been going down compared with a year ago, by about 779,000. These individuals accounted for 27.7 percent of the unemployed, and they tend to find it very hard to find work, though they’re still looking. The gradual improvement in the number of people suffering long-term unemployment benefits residential real estate somewhat, since workers out of the workforce for a long time aren’t forming households at either for-sale properties or (more likely) rental properties. Some of them eventually quit looking for work, but as others of them return to the workforce, more households are formed.

The overall U.S. unemployment rate, which is based on a separate BLS survey, dropped to 5.1 percent, the lowest rate since well before the recession. The U-6 is also still improving (“alternate measures of labor underutilization,” as the bureau call it, or the U-6; the headline number is U-3). The headline employment rate isn’t the complete picture, since it doesn’t count people who are too discouraged to look for work, or people who are trapped in part-time employment, but want a full-time job. The BLS, however, does track that broader definition of unemployment in the form of the less-well-known U-6. As the headline number has been improving in recent years, so has the U-6. In August, the U-6 came in at 10.3 percent, compared with 10.4 percent in July. A year ago, it was 12 percent.