NO JOB GROWTH IN AUGUST

BUT PROSPECTS IMPROVE

NATIONAL FEDERATION OF INDEPENDENT BUSINESS
William Dunkelberg, (610) 209-2955
(Based on 759 respondents to the AUGUST survey of a random sample of
NFIB’s member firms, surveyed through 8/30/13)

NFIB owners logged in the fourth negative month in a row for job creation, each
one worse than the prior month. Overall, owners reported a decline in
employment averaging 0.3 workers per firm. Eight percent of the owners (down
1 point) reported adding an average of 1.6 workers per firm over the past few
months. Offsetting that, 11 percent reduced employment (down 1 point) an
average of 3.0 workers (seasonally adjusted), producing the seasonally adjusted
gain of negative 0.30 workers per firm overall. The remaining 81 percent of
owners made no net change in employment. Forty-seven percent of the owners
hired or tried to hire in the last three months and 36 percent (79 percent of those
trying to hire or hiring) reported few or no qualified applicants for open positions.
Reports of workforce reductions have reached normal or sub-normal levels,
explaining the favorable levels of initial claims for unemployment. But owners
report sub-normal levels of hiring, so job growth remains anemic even with low
levels of initial claims.
Sixteen percent of all owners reported job openings they could not fill in the
current period (down 4 points), a negative signal for the unemployment rate.
Nine percent reported using temporary workers, down 6 points from July. Most
of the jobs “created” will likely be dominated by part-time workers.
Job creation plans rose a very large 7 points to a net sixteen percent planning to
increase total employment, the best reading since January, 2007 and historically
a very strong reading. Not seasonally adjusted, 15 percent plan to increase
employment at their firm (up 3 points), and 5 percent plan reductions (down 1
point). If this reading is not a fluke, it signals a substantial resumption of hiring in
the coming months. Hopefully, the September survey will validate the August
readings and reports of actual hiring will turn positive.

The upward revisions of second quarter GDP growth from 1.7% to 2.5% was
driven almost entirely by gains in exports and inventory accumulation, neither
much of a job driver. Inventory builds are good only if followed by hiring
spending to reduce those stocks. Otherwise, the build is a negative for future
GDP growth.