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5 key figures to look for in Friday's jobs report for August

Posted August 31

— The U.S. jobs report for August being released Friday will be watched to see whether employers extended a streak of steady hiring that's helped shrink the unemployment rate to 4.3 percent, a 16-year low.

Economists predict that the rate remained unchanged and that employers added 180,000 jobs, according to the data provider FactSet. That gain would be solid and in line with the average monthly job growth so far this year, though fewer than the 209,000 added in July and the 231,000 in June.

Also awaited will be clues to whether pay raises are finally accelerating, whether unemployment for African Americans will reach its lowest level on record and whether employers are asking their staffers to work more hours — a sign of strong customer demand.

Here are five things to look for in Friday's jobs report:

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WAGES

Even though hiring has been solid, the economy still feels sluggish to the many Americans whose pay raises remain meager.

Average hourly earnings have increased just 2.5 percent over the past 12 months. That's better than overall inflation. But it's less than half the annual growth in home prices, meaning that many Americans are falling behind on one of the pillars of a middle class identity.

By way of contrast, average hourly earnings increased at 4 percent in 1998 for rank-and-file workers. But economists say that wage growth may remain tepid because older workers with higher salaries are retiring, while younger millennials are entering the workforce at lower salaries.

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WORKER PARTICIPATION

A low unemployment rate isn't as wonderful as it might appear to be. That's because a smaller proportion of people are working or searching for a job. (Anyone not actively looking for a job isn't considered part of the labor force and isn't counted as unemployed.)

The proportion of Americans either working or looking for work — the so-called labor force participation rate — was 62.9 percent in July, down from 66 percent a decade ago. Some of that decline reflects an aging U.S. population that is retiring, which lowers the participation rate.

Some economists say the participation rate has become a positive sign for the economy in recent years. They note that this rate has held relatively steady after rising from a low of 62.4 percent in September 2015. This means that people keep deciding to look for work. So a labor force participation rate that might be expected to drop is instead solidifying.

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AFRICAN AMERICAN UNEMPLOYMENT

African Americans are within striking distance of 7 percent unemployment, an all-time low for this group since record-keeping began in 1972, set in April 2000.

Black unemployment ticked up from 7.1 percent in June to 7.4 percent in July. A strong August job gain could conceivably be enough to reach or surpass the record-low unemployment rate for African Americans.

A record-low rate for blacks would speak to a healing economy that has benefited much of the country. But it would still belie a troubling racial inequality: The unemployment rate for white Americans, by contrast, is just 3.8 percent.

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THE AUGUST FACTOR

Economists caution against becoming unduly concerned if the August jobs report registers only modest job growth. Hiring can appear to be depressed in August because of seasonal factors as employers transition from summer to fall that are hard for the government to factor precisely into its data, according to an analysis by Bank of America.

So a surprisingly low hiring figure might be viewed with some skepticism. It might well be revised upward later or be followed by improved job growth in subsequent months.

One infamous example occurred in 2011, when the Labor Department initially reported that zero jobs were added in August. That figure was eventually revised up to 110,000.

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HOURS WORKED

When businesses struggle to find enough workers to hire, many will ask their employees to work longer. And that may be exactly what is happening: The average workweek was 34.5 hours in July, a slight increase from 34.4 a year ago. That small rise translates into higher incomes across the economy.

Since the Great Recession officially ended in 2009, factory and construction workers have been spending more time on the job.

Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, said she expected the average hours worked to stay at 34.5 in August.

But she added, "A pickup in hours worked over a few months may signal businesses will soon accelerate hiring, something to watch and potentially good news as more people enter the market looking for work."

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