The unemployment rate, which is derived from a separate Labor Department survey of households, was 4.9 per cent for a third month, as the labour force increased, with a little more than half of those entering finding work.
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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.
Interest rates: Mostly positive data in the report increase the likelihood of a Fed rate increase before the end of the year. “But it’s solid enough to engender a heated policy discussion”, said Mohamed El-Erian, chief economic adviser at Allianz, in Newport Beach, California.
Despite the jobs data not clearly reinforcing a September rate hike, the dollar gained on the prospect of a December rate increase.
“This is a healthy thing if the gains slow down a little bit, because that reduces the risk that the Fed will quickly raise rates and choke off the expansion”, said Josh Wright, chief economist at iCIMS, a recruitment software company. But a calendar quirk could mean a soft reading, which would pull down the year-on-year from 2.6 percent in July.
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.
The dollar was marginally higher against a basket of currencies. U.S. crude settled up $1.28, or 2.97 per cent, at $44.44 a barrel. Combined with monetary policy focused on the goal of lowering unemployment for those facing the highest rates, stronger bargaining power would lead to a more inclusive, higher-quality labor market.
Dr Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth. Analysts had expected payrolls to rise by 180,000. That typically happens – since August growth sometimes appears lower because of seasonal changes.
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”.
The lack of clarity about a rate hike from the Fed this month boosted gold. Hourly wages also barely increased.
For the week the SP 500 rose 0.5 per cent to mark its first positive week in three, while the FTSEurofirst 300 posted its second straight week of gains and its biggest since mid-July, at 1.9 per cent.
A couple of FOMC voters noted at the July meeting that “some moderation in employment gains was to be expected” as the labor market neared their goals, according to the minutes. Even so, over time, the current pace of hiring is enough to lower the jobless rate.
The August slowdown in USA jobs creation follows stronger performances in June and July when a combined 546,000 jobs were added.
That latter total was lower than economists’ forecast of 170,000 new jobs and represents a setback after employment creation in recent months had returned to levels not seen since before the onset of the 2008-2009 Great Recession.
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In 2016, monthly job gains flip-flopped, plummeting to 24,000 in May and swelling to more than 10 times that number in June. Retail sector employment increased by 15,100 jobs and payrolls in the leisure and hospitality sector rose 29,000. Temporary help firms shed 3,100 positions.
