Introduction

This episode explores the August 2024 US jobs report, examining recent labor market trends and what they reveal about the economy’s direction. Despite adding more jobs than the previous month, gains still fell short of expectations, while revisions to prior months pulled down average job growth to its lowest level since the pandemic began. Notably, healthcare hiring showed signs of slowing after months of strong growth, raising questions about the broader economic outlook.

Yazad Dalal: Hi everyone, I’m Yazad Dalal, Chief Growth Officer here at Joveo and welcome to Recruiting Realities, where we bring you the latest developments and insights in recruitment. Today we’re speaking again with our own in-house labor market economist, David Garrett, about the US jobs report for August 2024. Hello, David!

David Garrett: Hey, how’s it going? Happy to be here again.

Yazad Dalal: Happy to have you and for our listeners, at Joveo, we publish Interactive Insights across all major occupations in the US. You can check that out on our website. joveo.com/interactive-insights 

David, the most recent US jobs report came out for August. The US labor market gained an estimated 142,000 jobs in August. That’s 28,000 more than July, but short of expectations and the unemployment rate fell by a tenth of a percent to 4.2%. We also saw that June and July payroll gains were revised down, which brings the three-month average to 116,000, which I think is the lowest that we’ve seen since the pandemic. And then maybe lastly, we saw a bit of a slowdown in the healthcare sector, which increased by 44,000 last month. And it’s the slowest growth since the beginning of 2022, which is a bit surprising considering that healthcare hiring had been such a stalwart compared to the slowdowns that we’ve been seeing in other industries. So I have lots of questions. Let’s get started. First of all, David, what are some of your key takeaways from the latest report?

David Garrett: Yeah, I mean, starting with the decline in unemployment rate it is primarily driven by a reversal of temporary layoffs, which was honestly a really good thing to see as it was pretty spread evenly across industries. There was no one industry that was overwhelmingly making up that number. But, you know, with that, it kind of indicates that labor demand is holding in there, you know, after last month, when we saw lots of widespread concern that it had been falling faster than expected with revisions.

And given that the number of job openings also fell to 7.7 million from, I think, 7.9 in June based off of the latest JOLTS report, it’s the lowest it’s been since January of 2021. On the unemployment rate, that 4.2% rate, it does continue to trigger Sahm’s rule on recession, so

Yazad Dalal: I remember we talked about that last month.

David Garrett: Yeah, and feel free to,  I’m not going to go into too much, but feel free to go watch the last episode if you want to learn more. It’s the three-month average of unemployment, the Q3 unemployment in particular, is now higher than the average for the past year. So this normally would or perhaps should raise some eyebrows about recession risks, as it has been a very reliable indicator. But there is also a lot of contention about how seriously we need to take it as an indicator. Most of the increase in job loss impacting unemployment has been temporary, as I mentioned, and so, you know, since we haven’t seen this sort of steep increase that we would see in permanent job losses that we normally would if recession was starting, it’s, you know, the fact that also we saw a decline in unemployment this month, it’s more of a good indicator that some of the increases we see could just be due to residual seasonality. A lot of people are claiming hurricane Beryl. And, you know, it’s also in line with what we saw last year.

So more or less the report continues to show that the economy is slowing down, but we’re still headed towards that sort of soft landing that we’ve been discussing over the past few months.

Yazad Dalal: Got it. Well, thank you, David, and thank you to our listeners. And don’t forget to visit us at joveo.com and we’ll see you again soon.

David Garrett: Yeah, take care.

Conclusion

The August jobs report signals a labor market that continues to slow but holds some positive signs, including a slight dip in the unemployment rate and temporary layoffs reversing. However, indicators like Sahm’s Rule keep recession concerns alive, even as debate continues over how closely to watch these signals. Overall, the data points toward a cautious path forward, with hopes for a soft landing remaining intact.