Still rising

GIVEN the consistently disappointing data we've seen out of the American economy in recent weeks, the outlook for this morning's August payroll employment report was uncomfortably uncertain. Initial jobless claims have risen ominously of late, and a number of indicators of economic activity have edged downward, leading some to believe that the Labour Department would provide evidence of a sharp retrenchment in labour markets for the month.

In fact, the figures aren't that bad. The headline number is negative—off 54,000 for the month—but that's overwhelmingly due to the continued drawdown in temporary census employment, which subtracted 114,000 jobs from the August report. Ex-census, the economy added 60,000 jobs in August. Private employment rose by 67,000 for the month. Since December of 2009, private employment has grown by a total of 763,000.

Meanwhile, revisions to previous months' data indicated a better labour market performance than was previously believed. The June employment change was revised from a drop of 221,000 to a decline of 175,000, and the change in July was revised from a decline of 131,000 jobs to a dip of just 54,000. (In both cases, the headline negative figures were also attributable to the unwinding of temporary census hiring). July private employment growth was revised up to 107,000 jobs.

Of course, these positive moves still don't amount to an economy producing enough jobs to rapidly bring down the unemployment rate. The jobless rate ticked up in August, from 9.5% to 9.6%. The upward shift doesn't necessarily signal a deterioration. Household employment (figured as part of a different survey from the payroll number) rose by 290,000 for the month, but that was not enough to compensate for the 550,000 worker increase in the size of the labour force. But at this point in the business cycle, labour force growth is a positive sign. Still, all involved would prefer to see the economy adding far more jobs; at this pace, full employment might not return until mid-decade.

Some potentially good news is the drop in long-term unemployment in this report. Both the number and percentage of unemployed workers off the job for more than 26 weeks declined in August. A key question is whether the drop is due to reemployment or departures from the labour force. The average and median durations of unemployment also fell.

Temporary help services continued to be a strong source of employment growth, as did the health and education sector. Manufacturing employment offset some of this rise, due largely to normal cycles in the production schedule in the automobile industry. Hours and earnings both showed slow but steady growth, yet again.

The overall picture is of a labour market that continues to chug along in the right direction, albeit far too slowly. The pace of employment recovery implies several long, hard years ahead for American workers. But given the mood on markets and around dinner tables lately, one has to appreciate the continuation of the upward trend.