In August, construction payrolls rose 3,000 on top of the 7,000 jobs added in July.
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“The U.S. economy generating just 173,000 new jobs in August – the smallest monthly gain since April – did little to derail talk of imminent Fed action”, said Richard de Meo, managing director at Foenix Partners.
What’s more, for the three months ending in July this year, the jobs situation has improved by other measures.
Richmond Fed President Jeffrey Lacker, who’s historically been more inclined toward tighter policy than most of his colleagues, said after delivering a speech Friday that the labor data represented a “good report” that doesn’t change the picture for monetary policy.
“Anyone hoping today’s data would clear up the timing of the Fed’s first rate hike in years will be sorely disappointed”, said Megan Greene, chief economist at John Hancock Asset Management.
That new rate brings joblessness close to what the Fed considers full employment.
The data will help Fed officials judge whether the labor market is showing improvement necessary for the central bank to initiate interest rate hike in its September meeting. Although this is better than expected it is still not in the 3.5 percent growth that the Federal Reserve is hoping for. June’s figure was also revised upward from 231,000 to 245,000.
Yet manufacturers and energy producers cut jobs, the result of cheap oil prices and a stronger <strong>dollarstrong> that’s made USA <strong>exportsstrong> harder to sell. Investors appeared disappointed with the report on the back of the belief that the unemployment rate would push the Federal Reserve to hike interest rates in the near future which would be seen as a huge negative for equity prices around the globe.
The number of long-term unemployed, those jobless for 27 weeks or more was 2.2 million, down 779,000 from August of 2014.
Economists surveyed by the Wall Street Journal had projected a 220,000 increase in payrolls and a drop in the unemployment rate to 5.2%. The rate hike will ripple through several layers in the economy. Average hourly earnings rose 0.2 percent month over month.
In addition to the lukewarm jobs gains, wages didn’t grow much in August either.
While the steady hiring could encourage the Fed to raise interest rates for the first time in nearly a decade later this month, some economists think that a sharp economic slowdown in China could prompt policymakers to keep rates low. “The recent stock market volatility and the cracks in the Chinese economy have not yet shown up in the labor market”.
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Meanwhile, the share of Americans either working or looking for work stayed steady at 62.6 per cent in August.
