Amid Trade War, US Job Growth Misses Estimates

The trade war, indirectly, seems to have had an impact on hiring.

The latest data from the Labor Department show that in the United States, payrolls increased by 130,000, missing expectations for an August increase of 150,000. That was the total payroll count, which included 25,000 temporary government workers tied to the 2020 census activities.

Perhaps one of the more significant data points came from the private payrolls count, which came in at 96,000, a three-month low, which came on top of a newly downwardly-revised 131,000 in July and where the average has been 129,000 through the last several months.

Among other data points, perhaps to be viewed relatively positively, the jobless rate held at 3.7 percent. The tight labor market may be spurring wage growth, to 3.2 percent gains as measured year on year, and up 40 basis points from July (though, it should be noted, down from 3.3 percent).

But as measured against longer-term trends, the average monthly payroll growth has been a bit higher than 150,000 and the latest numbers seem to signal caution amid the ongoing trade war between the United States and China.

That’s hit manufacturing jobs, where job growth was a muted 3,000 and has averaged 6,000 jobs monthly, where once that tally was 22,000 in 2018. In addition, retail jobs were also down, off by 11,100 positions, extending a multi-month decline.

The manufacturing and retail numbers presage a couple of longer-term trends, perhaps troubling ones. As noted in this space in recent months, inventories have been on the rise, and shipments for core capital goods have declined. That hints at, perhaps, stockpiling of items that may not get sold. The fact that retailers have continued to shed jobs comes as a function, of course, of store closings, a well-documented and likely permanent trend, and that hiring may not rebound into the holiday season.

Slowing wage growth also may help set the stage for another Fed rate cut, in hopes of spurring economic growth. As has been widely reported, the central bank has been mulling another cut at the mid-September meeting. But for businesses to put capital to work, they must see some hints of demand down the road. The slowing rate of hiring does not smack of optimism — and all the while, global economic growth, as measured on the world stage, is weakening.