The August jobs report changes nothing

The month-to-month volatility of the jobs numbers, and the magnitude of their eventual revisions, make it nearly impossible to draw new conclusions from a one-month hit or miss relative to expectations. The fact that new private sector jobs increased 134K in August, well under expectations of 198K, is therefore not indicative of any sudden deterioration in the jobs market or the jobs outlook. As the following graphs show, all of the recent trends in the labor market remain unchanged.

The August drop in private sector job creation falls well within the normal range of this series on a month-to-month basis. Job growth by this measure is still averaging just under 200K per month, as it has for the past several years.

The six-month annualized growth rate of private sector jobs is still just a bit above 2%, the same rate we have seen since early 2011.

Total private sector jobs are making new highs, and have increased by over 8 million in the past five years. Public sector jobs are no longer declining, and are now growing very slowly.

The labor force is still growing at a miserably slow rate.

Part-time employment is still relatively flat, and is still declining slowly relative to total employment. This is the same pattern we have seen in nearly ever recovery in the past 50 years.

Conclusions: The economy is likely still growing at a 2-3% pace. It's still a very sub-par recovery. There is no sign of a recession or a boom. Things are not likely to change materially unless and until we get some improvement in fiscal policies (e.g., reduced regulatory burdens, lower and flatter marginal tax rates).