Job growth continued its remarkable pace in August, and data on hourly earnings show that wage growth is advancing at the fastest pace in over nine years. Strength in the overall labor market continues to spill into the trucking industry, which added jobs for the 11th time in 12 months.
The Bureau of Labor Statistics reported that the economy added 210,00 workers during the month, down from a downwardly-revised gain of 147000 in the previous month. This beat consensus estimates of 195,000 and is the third monthly gain above 200,000 in the past four months. Job growth during the month came despite a surprise decline in manufacturing employment, which fell for the first time in over a year in August. Again, much of the growth was driven by the service sector, with impressive gains coming from health care, professional and business services, and transportation during the month. On the goods side of the economy, construction employment continued to impress, as employers in the sector added 23,000 workers to payrolls.
In addition, wage growth topped expectations in August. Average hourly earnings rose 0.4% from July’s levels, as year-over-year growth rose to 2.9%. This marks the fastest pace of wage growth in the economy since May 2009 and serves as a sign that businesses are beginning to compete harder for the limited pool of available workers. The unemployment rate held at 3.9%, near the lowest reading of the past 50 years.
Trends in freight hiring
As mentioned, one of the highlights of this mornings report was the transportation and warehousing sector, which added over 20,0000 workers in August. Within the broader industry, truck transportation led the way during the month, adding 5,700 workers to payrolls. This beat out the number of hires among couriers and messengers (3,800 jobs added) and warehousing (2,400 jobs added) as well as every other mode of freight transportation in the economy. Trucking employment is now 2.1% higher than at this point last year. This is faster than the 1.6% pace of growth in the overall economy, as is the fastest pace of hiring in the industry in three years. In fact, the pace of hiring within the trucking industry now exceeds the growth of manufacturing jobs in the economy, which is only 2% higher than at this point last year
The improvement in trucking hires serves as a sign that capacity is slowly beginning to come back to the market and may be gaining some traction in competing against other sectors of the economy for workers. Still, more needs to be done, as capacity remains tight in the economy in the 3rd quarter.
Behind the numbers
The jobs number this morning was roughly in line with expectations. The job gain beat consensus estimates slightly for August, but downward revisions to previous months offset that. The big surprise here was in manufacturing, which looked to have been adding jobs at a torrid pace over the past 12 months before the August decline. The revisions also hit the manufacturing sector the hardest, showing almost 30,000 less jobs added in the sector over the previous three months. One explanation for the August manufacturing decline is that is that all of the tariff talks and action is starting to have an impact. The other is that manufacturers just can’t fill their open positions. It is a bit tough to say with just one bad month, but upcoming data on openings and wages in the sector should give more insight as to what is going on there. Overall wage growth finally looks to finally be picking up, but the hourly earnings data has given plenty of false hope of an acceleration over the past couple of years.
In general, the picture again speaks to continued tightening in the labor market. There were big gains in temporary help employment during the month, which might suggest firms are trying to find whoever they can to fulfill demand. In addition, the household survey saw a large shift in part time workers who became full time employees.
On the trucking side, this month’s results fall in line with what we have been seeing in recent months, with capacity looking like it its gradually returning to the market. It appears that carriers’ efforts to increase wages and benefits to attract and retain workers is taking some hold, but again, more needs to be done. It’s worth noting that the BLS figures in the employment report only track payroll employment, so these results may understate the actual number of jobs added if there is some additional job growth among independents or owner-operated trucks. Conversely, it may also overstate the job growth if the workers that are being added to trucking payrolls are just former independents. Either way, the trends in hiring look positive in the 3rd quarter relative to recent history and the industry looks to be making some strides in the right direction.