The U.S. economy added 151,000 jobs in August, less than many economists projected, and the unemployment rate did not move, staying at a historically low 4.9 percent for the third month. The median forecast in a Bloomberg survey called for 180,000.
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The Federal Open Market Committee has gradually raised the target range for that key rate since December from historically low levels and has said that more rate hikes will be appropriate over time, although it has conditioned such action on continued moderate growth of the USA economy and additional strengthening of the labor market.
An underwhelming jobs report pushed Wall Street higher Friday as investors seemed to think it would delay a rate hike from the Fed this month.
Michael Gapen, chief USA economist with Barclay’s, told ABC News that he’s standing by his September hike call, but admitted “the optics of this report are less than we would have liked”. That would be below the 255,000 gained in July and June’s 292,000, which was the most in eight months. Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth. Low response rates in a popular vacation month and difficulty adjusting for seasonal effects at the start of the school year could be to blame.
According to the official report, the total nonfarm payroll employment went up by 151,000 in August.
Average hourly earnings rose 0.1 per cent from a month earlier to $25.73, following a 0.3 per cent increase in the previous month.
Americans worked fewer hours last month, with the average workweek dipping to 34.3 hours from 34.4 hours in July.
In August, though, hiring weakened across most major industries, and employers cut workers in manufacturing, construction and mining. 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. Retail sector employment increased by 15,100 jobs and payrolls in the leisure and hospitality sector rose 29,000. August’s results follow a surge of hiring this summer that helped ease investor anxiety over turbulence in the global economy that weighed on the USA recovery during the first half of the year. The Nasdaq Composite was up 20.82 points, or 0.4 percent, at 5,248.02. “It confirms that the economy is performing well, but does not provide the threat of overheating that might have caused an interest-rate increase sooner rather than later”.
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Rate hike probabilities for September and December had risen after last Friday’s remarks by Fed chairwoman Janet Yellen that the case for raising rates had strengthened in recent months.
