Gallup U.S. Job Creation Index remains at six year high for August

Gallup's U.S. Job Creation Index held steady in August at +28, tying the six-year high reached in July. This is up from +22 in August a year ago. The index has been fairly flat since May, when it reached +27, after trending up in the first few months of 2014.

Gallup's Job Creation Index is a measure of net hiring in the U.S. as reported by a nationally representative sample of full- and part-time workers. In August, 41% of workers said their employer is hiring and expanding the size of its workforce, while 13% said their employer is letting workers go and reducing the size of its workforce, resulting in the +28 net hiring score.

This is only the second month since 2008 -- the first being last month -- that slightly more workers reported their employer is hiring rather than maintaining the status quo.
Net hiring increased in August among government workers, rising to +23, up from +17 in July. By contrast, it stood at +29 among nongovernment workers, similar to the +30 among this group in July. The reason the overall index did not move is that government employees account for 15% of the workforce in Gallup's data, whereas 84% report not working for the government.

The resulting six-point gap in reported net hiring between government and nongovernment workers last month is the smallest Gallup has recorded since January 2010, largely driven by the steady gain in net hiring reports among government workers seen since early 2013.

Overall job creation in the U.S. was steady in August, at the highest level seen in the six-plus years of Gallup tracking it. Unchanging job creation is good news in the sense that the recent gains are holding. However, this steadiness could be a troubling sign if the lack of improvement continues, indicative of persistent weakness in the economy. This is particularly true for private-sector job creation that has been fairly flat over the past two years, while government job creation has consistently edged higher. This pattern of flat private-sector job creation coupled with rising government employment would seem to be unsustainable; at some point, private-sector job creation will need to show renewed strength to provide the tax base needed to pay for new public-sector jobs.