The U.S. heads into the Labor Day weekend with something of a letdown, as Friday’s jobs report reveals hiring cooled off in August.
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“There was a quiet confidence the USA economy would put in a bigger than expected number on Friday and pick up where June and July left off”, said Marcus Bullus, trading director at MB Capital.
It was also a smaller rise than the average monthly increase of 204,000 seen during the previous 12 months.
140-a-11-(Gus Faucher (foh-SHAY’), deputy chief economist, PNC Financial, in AP interview)-“continues to improve”-Economist Gus Faucher says that although the 151,000 added jobs is a modest figure, the overall economic outlook is still good”. The unemployment rate is forecast falling one-tenth of a percentage point to 4.8 percent. The S&P 500 was up 0.50% since Monday, the Dow Jones Industrial Average added 0.52%, and the Nasdaq gained 0.59%.
Average hourly earnings rose 0.1 per cent from a month earlier to $US25.73, following a 0.3 per cent increase in the prior month.
Richmond Federal Reserve Bank President Jeffrey Lacker said on Friday that the US economy appears strong enough to warrant significantly higher interest rates. After this mildly disappointing August print, a rate hike in September is less likely but it’s still on the table. “After all inflation pressures are very benign and the US election has the potential to weigh on sentiment and activity a touch”.
While North said he doesn’t expect to see any move on interest rates before the Fed’s December meeting, he noted the consumer has continued to be the bright spot in the economy, arguing continued strength there will hold up second-half growth.
Hawkish statements from Fed Chair Janet Yellen and Vice Chair Stanley Fischer last week had increased expectations that the USA central bank is closer to raising rates, though most investors see one increase in December as most likely if the Fed hikes this year.
As far as average earnings are concerned, there was a monthly increase of 0.1% compared with expectations of a 0.2% monthly gain with the annual increase declining to 2.4% from 2.6%. Over the last several years, the government’s August payrolls estimates have been weak only to be subsequently revised higher.
The Fed lifted its benchmark overnight interest rate at the end of a year ago for the first time in almost a decade, but has held it steady since amid concerns over low inflation.
Fed officials have noted the economy’s improvement and the decline in the unemployment rate to levels considered all but fully healthy.
A tighter job market should support further wage growth and give Americans the ability to spend more. “There was positive growth in payrolls, but there’s just no wage pressure…the economy is in slow-growth mode”, North said. The mining and logging sector shed 4,000 jobs, while construction employment lost 6,000 and domestic manufacturers saw their employment opportunities slashed by 14,000 jobs. Here are three reasons why the August jobs report was actually a lot better than people thought, and why the Fed may still think hard about raising rates. US economic growth has held near 1% for three straight quarters, anemic gains even by the standards of the lackluster expansion.
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Last month, manufacturing sector employment was likely flat after rising for two straight months.
