US August NFP consistent with economic growth - Wells Fargo

According to analysts from Wells Fargo,  August job gains of 156,000 and a steady rise in wages indicate continued economic growth and consumer spending. They warn that structural unemployment issues remain. 

Key Quotes: 

“Nonfarm payrolls rose 156,000 in August, with the three month average at 185,000 jobs. Job gains are consistent with 2.5 percent economic growth in the third quarter, steady consumer spending and Fed policy as currently projected for a December rate hike.”

“Despite the focus on nominal wage gains, the real story for the American household is that real wages continue to rise and thereby boost household real incomes and consumer spending.”

“Nominal average hourly earnings rose 0.1 percent in August and are up 2.5 percent over the year. While job growth remains strong, earnings continue to hang in this mid-two percent pace. The softer inflation readings and weak productivity numbers have limited the gains in nominal wage growth.”

“For any given unemployment rate (labor supply) the vacancy rate (job openings) remains wider than in the prior ten year period. This Beveridge Curve signals a structural weakness in the labor market which is confirmed by several labor market survey indicators. Compared to a year ago, the unemployment rate for those without a high school education and with a high school diploma remains higher than the unemployment rate for those with some college.

“The mean duration of unemployment rate remains at 24.4 weeks which is higher than any level since 1982. Finally, the prime age labor force participation rate has risen over the last year but remains far below the level of participation since 1990.”