Nonfarm payrolls averaged a 185,000 gain over the three months ending in August, a relatively strong pace considering that labor market constraints are more binding and reports of worker shortages are rising. The unemployment rate held steady at 3.9%, held up by a drop in labor force participation (likely a seasonal quirk related to the start of the school year). Average hourly earnings surprised to the upside, although these figures tend to be quirky.
Prior to seasonal adjustment, nonfarm payrolls advanced by 334,000 in August (about the same as a year ago), with almost all of that in education (non-education jobs rose 8,000, vs. -6,000 in August 2017). Adjusted, payrolls rose by 201,000 (median forecast: +190,000), but with a net downward revision of 50,000 to the two previous months. That left the three-month average at +185,000 (+183,000 for the private sector). Manufacturing payrolls fell by 3,000 (auto production: -4,900, although seasonal adjustment is difficult in July and August due to summer plant closings). The pace of job growth improved in the first half of this year. The demographics (an aging population and more limited pace of immigration) suggest that labor force growth should be slowing.