Nonfarm payrolls rise by +142k in August. Private payrolls +118k.

Before we dive into our take on all the moving parts in today's Nonfarm payroll data release, we'll first share that we've updated the Bancreek U.S. Employment Data Treemap with today's data (embedded below). So, if you are the type that just wants the visualization and less words, here you go. Also, as a heads up, it usually only takes us 10-15 minutes to update and repost this visualization on bancreek.com, versus a few hours to gather, write, and publish our thoughts. So, if you want to play with this viz as soon as its ready on Nonfarm payroll data release day, make sure to bookmark this page.

On the other hand, if you are interested in our thoughts on the data, keep reading for our key takeaways.

Health care gets some assistance from other industries in August

This month was a welcome reprieve from what we believe to be a concerning trend: health care's dominance of U.S. job growth. For context, as shown below, Health care and social assistance jobs only comprise 17% of the total private workforce. But since the end of 2021, this one industry has been responsible for 31% of all of the private job growth. But that understates how important this industry has been to our hope of engineering a soft landing in 2024. Through July 2024 the U.S. has added 1.09 million jobs, 540k of which have come in Health care and social assistance. That's 49% of all new jobs coming from this one industry.

Source: Bancreek Capital Advisors

Against this backdrop, we were somewhat relieved to see Health care and social assistance's percent of total private job growth drop to "only" 37% in August, with a few other industries picking up the slack.

We'll call out two industries that stood out this month for their relatively strong job growth: Leisure and Hospitality and Construction.

Leisure and hospitality jobs accelerate in August

The chart below shows the monthly job adds within Leisure and Hospitality dating back to the start of 2022. As the chart makes clear, this industry was a large driver of 2022/23 job growth as the industry roared back from a devastating COVID-induced drop in early 2020 (FYI: this industry shed 48% of its jobs between February and April of 2020!).

Source: Bancreek Capital Advisors

Compared to 2022 and 2023, 2024 had been a disappointment for this industry, only adding 114k jobs through July. But now we have another 46k new jobs in Leisure and hospitality in August, making it one of the largest contributors to job growth in the month.

Construction jobs post second strongest month-over-month growth this year

Construction was, in our view, the other standout industry this month, posting job growth of 34k in August. As shown in the chart below, besides a weak print in April, job growth in Construction has been resilient throughout 2024. But this month's job adds were especially strong, trailing only one other month in 2024. More impressively, if we look back to the start of 2022, this month's job growth in Construction eclipsed all but four other months.

Source: Bancreek Capital Advisors

Industries responsible for nearly half of the U.S. labor force are stuck in the mud

We can't construct our way into prosperity, at least when it comes to the rate of job growth needed to absorb natural growth in the labor force. That's because the Construction industry is too small - it is responsible for just 8.3 million jobs out of a total of 135.4 million private jobs.

Rather we need to look to the largest private industries for job growth. Health care and social assistance is one of them (22.5 million jobs), and as we've already mentioned, it's pulling its weight and then some. Leisure and hospitality is another (17.0 million jobs), and at least this month did its job as well.

But sadly, not all large industries are pulling their weight. There are 29.0 million jobs in Trade, transportation, and utilities, 23.0 million jobs in Professional and business services, and 12.9 million jobs in Manufacturing. Add all three industry groups together and they are responsible for 48% of all private jobs. And this month, these three industries together lost 14k jobs. The situation gets even more bleak when you look over the last three months, over which these industries have collectively lost 40k jobs.

Source: Bancreek Capital Advisors

Limping along on one good leg

In short, with nearly half of the private job market stagnant for the last three months, job growth is limping along on one leg. The good news is that the one functioning job growth "leg" includes health care, which as we have written, largely has been immune to economic cycles. It also includes construction, but this industry is just too small to sustainably create enough jobs. In August, it also included a decent amount of hiring in accommodations and food services, which for now, seems to be more of an outlier than a trend.

So, we are going to need to get that other leg working at some point in time to reinvigorate the job market. Either that or the U.S. economy needs to take itself to the emergency room and pay inflated chargemaster list prices to get its broken leg checked out. Maybe that will help fuel even more job growth in health care!