BBVA Research publishes economic analysis: Signs of sustained labor market momentum

Rhea-AI Summary

The U.S. labor market showed signs of recovery in August, with non-farm payrolls increasing by 1.4 million and the unemployment rate dropping to 8.4%. Temporary layoffs decreased by over 3 million, and labor force participation rose to nearly 62%. Weekly earnings gained 0.4% month-over-month, reflecting a 4.7% annual increase. Despite positive trends, the full recovery to maximum employment remains uncertain due to pandemic impacts. BBVA Research indicates low policy rates will persist as wage-inflation pressures are contained.

Positive

• Non-farm payrolls grew by 1.4 million.
• Unemployment rate decreased to 8.4%.
• Temporary layoffs fell by more than 3 million.
• Weekly earnings increased by 0.4%, showing a 4.7% annual growth.

Negative

• Full recovery to maximum employment is still uncertain due to pandemic effects.
• Wage-inflation pressures are expected to remain contained.

HOUSTON, Sept. 16, 2020 /PRNewswire/ -- The U.S. labor market continued to improve in August, according to the latest economic analysis from the BBVA Research team.

Non-farm payrolls grew by 1.4 million and the unemployment rate dropped to 8.4 percent. In addition, the number of people on temporary layoff declined by more than 3 million, while the labor force participation edged up to nearly 62 percent. 

The analysis, co-authored by BBVA Chief Economist Nathaniel Karp and Senior Economist Boyd Nash-Stacey, highlights the reverse in weekly hours declines from previous months, with all major industries except education and healthcare reporting a gain. Likewise, weekly earnings posted a solid 0.4 percent monthly gain, implying a 4.7 percent increase in the last 12 months.

The report imprints an upside bias to the research team's short-term forecasts and suggests that labor market conditions could normalize sooner than expected. However, given the magnitude of the fallout due to the pandemic, a full recovery to "maximum employment" is still likely to take time, while wage-inflation pressures will remain contained. Based on the Federal Reserve's updated Statement on Longer-Run Goals and Monetary Policy Strategy, this implication is that policy rates and the yield curve will remain low for a prolonged period.

BBVA USA's research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The Economic Research team also follows a variety of issues that affect the Sunbelt states where BBVA USA operates. Follow their work on Twitter @BBVAResearch and @BBVANews_USA.

Read the full report here.

See the complete library of BBVA Research publications here.

For more BBVA news visit, www.bbva.com and the U.S. Newsroom.

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For more financial information about BBVA in the U.S., visit bbvausa.investorroom.com.

About BBVA

BBVA Group
BBVA (NYSE: BBVA) is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market, is the largest financial institution in Mexico, it has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey's Garanti BBVA. Its purpose is to bring the age of opportunities to everyone, based on our customers' real needs: provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. Its responsible banking model aspires to achieve a more inclusive and sustainable society.

BBVA USA
In the U.S., BBVA is a Sunbelt-based financial institution that operates 641 branches, including 330 in Texas, 89 in Alabama, 63 in Arizona, 61 in California, 44 in Florida, 37 in Colorado and 17 in New Mexico. The bank ranks among the top 25 largest U.S. commercial banks based on deposit market share and ranks among the largest banks in Alabama (2nd), Texas (4th) and Arizona (6th). In the U.S., BBVA has been recognized as one of the leading small business lenders by the Small Business Administration (SBA) and ranked 8th nationally in terms of dollar volume of SBA loans originated in fiscal year 2018.

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SOURCE BBVA USA

FAQ

What is the current unemployment rate according to BBVA's analysis?

The current unemployment rate is 8.4%.

How many jobs were added in the U.S. labor market in August 2020?

The U.S. labor market added 1.4 million jobs in August 2020.

What does BBVA Research say about the recovery of the labor market?

BBVA Research suggests that while labor market conditions show improvement, a full recovery to maximum employment will take time.

What was the change in weekly earnings reported by BBVA in August?

Weekly earnings posted a solid 0.4% gain for the month, reflecting a 4.7% increase over the last 12 months.

How did temporary layoffs change in August 2020?

Temporary layoffs declined by more than 3 million in August 2020.