Analysts had expected payrolls to rise by 180,000.
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“This mixed jobs report puts the Fed in a tricky situation”, said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
The 89 estimates in the Bloomberg survey ranged from gains of 92,000 to 255,000 after a previously reported 255,000 July increase.
When the Fed hiked rates in December 2015, Yellen told Congress right before the move that the FOMC could decide to raise rates at the December meeting, depending on the data.
The Fed has raised rates just once, in December, since the US economy emerged from the financial crisis and has yet to do so in 2016. “Since the 15th of the month falls after the survey period, increases in bi-monthly pay are less likely to have been captured, skewing the result lower”, said Michelle Girard, chief USA economist at RBS in Stamford, Connecticut. A Fed hike remains a possibility in September, but the smart money says to expect one closer to the holidays. But almost 58 percent forecast at least one increase will take place by the end of the year.
G-20 WORLD LEADERS: Meanwhile, leaders of the Group of 20 most powerful economies are attending a two-day meeting this weekend, with the global economy expected to be one of the main discussion topics. Average hourly earnings grew only 0.1 per cent, bringing the 12-month increase in wages to 2.4 per cent, modest though still ahead of inflation.
Fed officials have noted the economy’s improvement and the decline in the unemployment rate to levels considered all but fully healthy.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”, Fed Chair Janet Yellen said in a press conference at Jackson Hole, Wyo., last week.
The analysts at Econoday pointed out, “Earnings are very soft in this report, up only 0.1 percent in the month”, so that wages over a year rose 2.4 percent, a slowdown from July.
After two expectation-smashing jobs reports in June and July, the August jobs report shows a slight easing up in the momentum of this summer’s job growth. Others, including Evercore ISI’s Krishna Guha, suggested this month’s figures, which are traditionally weak and tend to be revised higher, will follow the same path of Augusts past, which has seen an average revision of 62,000 over the last five years.
The US central bank is also closely watching wage growth, which slowed in August, according to the latest figures. The Conference Board said this week that its measure of consumer confidence reached an 11-month high in August.
The greenback also jumped 0.71 percent to 104.27 yen JPY= , after earlier rising to 104.31 yen, the highest since July 29. Few are investing in new plants and equipment, thereby depressing factory output.
A report this week suggesting USA manufacturing shrank in August added to the mood of caution around the economic outlook but many economists still see a rate rise in December as likely.
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Americans are willing to make big purchases, such as homes and cars, but sales of both may have plateaued.
