August payrolls significantly missed estimates, with the US economy only adding 235K, compared to the 733K expected gain. On the bright side, July’s number was revised upwards to just over 1M, but it appears clear Delta is having an impact by significantly slowing down hiring. In addition, leisure and hospitality jobs, big contributors to the past month’s gains, ground to an abrupt halt. The labor market will be a key component of the Fed’s calculus on when to shift policy, and August’s miss adds more uncertainty to the expectations surrounding tapering.
With the jobs report, the unemployment rate dropped to 5.2%, and average hourly earnings rose 0.6%, double the consensus expectations.
Jobless claims are still falling, with last week’s number of 340K new claims a new pandemic low.
Manufacturing continues to expand, with the ISM Manufacturing survey rising in August to 59.9 (above 50 indicate expansion), but labor and logistics issues are holding back even stronger growth.