USA job creation slowed in August, adding 151,000 new positions for the month, according to data released Friday by the Labor Department.
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Goldman Sachs economists on Friday revised their expectations of a September rate hike upward to 55 percent, saying employment growth was above the pace Fed officials typically consider sufficient to hold the unemployment rate steady over time.
The report was viewed as close to Goldilocks – not too hot, not too cold – because it’s likely to keep the Federal Reserve on hold when it meets on September 21.
The US economy appears strong enough to warrant significantly higher interest rates, Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday.
Unemployment rose for African-American young people, aged 16 to 19, to 26.1 percent, up from 25.7 percent. “Also, people holding multiple job has risen by 333,000 persons during the previous year”.
Oil prices rose about 2 per cent after the jobs report weighed on the dollar.
The dollar dropped against the yen and a basket of currencies after nonfarm payrolls rose by 151,000 jobs last month, below consensus expectations of 180,000.
Employment in several other industries including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, temporary help services and government changed little over the month.
Last week Janet Yellen, the chairwoman of the Federal Reserve, said the country’s economic growth and a stronger jobs market meant “the case for an increase in the federal funds rate has strengthened in recent months”. The measure stood at 24 per cent before the jobs report was released.
Several Fed officials have made hawkish comments about a rate hike in recent weeks, leaving investors unable to rule out the possibility of an increase at the central bank’s next meeting, scheduled for September 20-21.
Speaking to a group of economists in Richmond, Lacker argued that a range of economic analysis suggests the Fed’s benchmark overnight interest rate – the federal funds rate – is now too low.
Average hourly employee earnings in August were up by 2.4 percent compared to the same month a year ago, reflecting a slowdown versus the 2.7 percent increase in July. “Month after month after month, the economy is creating jobs, pushing unemployment down”. Moreover, the average workweek declined to 34.3 hours from 34.4 in July, also missing analysts’ expectations for a tick up to 34.5.
Viewing the daily chart for the U.S. dollar, the first green arrow indicates Yellen’s remarks which visibly brought the dollar higher until yesterday, when it stalled ahead of Friday’s jobs growth data.
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Still, record numbers of workers remain out of the labour market altogether, widening the gap between the haves and the have-nots and depressing wage growth.
