The rise in the employment component, combined with the drop in new jobless claims reported earlier today, suggests that employment conditions remain good at the start of the year.
If you look at the 12-month change in producer prices, it's positive 0.9 percent. As recently as May, the 12-month change was negative 2.8 percent -- so there were a lot more deflationary pressures earlier in year, and those seem to be abating.
The drop in August is just a pullback from that earlier surge in spending.