The slowdown was particularly pronounced in certain sectors:
- Professional and business services declined by 16,000 jobs
- Manufacturing lost 8,000 positions
- Information services saw a decrease of 4,000 jobs
However, some sectors continued to add jobs:
- Education and health services increased by 29,000
- Construction added 27,000 positions
- Financial activities gained 18,000 jobs
Layoffs on the Rise
Compounding the hiring slowdown, layoffs have surged. According to Challenger, Gray & Christmas, August saw the highest number of job cuts for the month in 15 years. The technology sector was hit particularly hard, announcing 41,829 cuts – the most in 20 months.
Productivity and Labor Costs
In a separate report, the Bureau of Labor Statistics revealed that nonfarm business sector labor productivity increased by 2.5% in the second quarter of 2024. This was accompanied by a modest 0.4% increase in unit labor costs, reflecting a 3.0% rise in hourly compensation partially offset by productivity gains.
Initial Jobless Claims
The latest data on initial jobless claims showed a slight improvement, with 227,000 claims filed in the most recent week, lower than the estimated 230,000. However, this figure remains elevated compared to historical norms.
Market Forecast
The cooling labor market is likely to influence the Federal Reserve’s upcoming policy decisions. Markets are now pricing in at least a quarter percentage point cut at the September meeting, with expectations of a full percentage point reduction by the end of 2024.