US economy creates 156,000 jobs in August, unemployment rate ticks up

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US job growth cooled more than expected in August, with the previous month’s gains revised lower as well, while wages rose less than estimated.

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Employers added 156,000 jobs in August with job gains in manufacturing, construction, healthcare, professional and technical services and mining, a report from the labour department showed — the weakest pace of increases in three months. That compared with Wall Street expectations of 180,000. June’s non-farm payrolls growth was revised lower to 189,000 from 209,000 previously.

The report showed that Hurricane Harvey had “no discernable effect” on the data as the household survey was completed before the storm.

Despite the miss, non-farm payrolls have increased by an average of 185,000 each month over the past three months and averaged 176,000 per month so far this year.

August data have historically been softer, with the initial estimate later revised higher. Economists have previously noted that with the economy close to full employment, it would be hard to sustain job growth above 200,000.

The report also showed that the jobless rate ticked up to 4.4 per cent from a 16-year low of 4.3 per cent in July, while the labour force participation rate was unchanged at 62.9 per cent.

Average hourly earnings rose just 0.1 per cent last month, unchanged from July’s figures and missing expectations for a 0.2 per cent rise. From a year ago, average hourly earnings were up 2.5 per cent. However, Ian Shepherdson, an economist at Pantheon Macroeconomics, was quick to note that wages slipped as the 15th pay day for those that are paid bi-weekly fell after the survey week, which likely depressed figures.

“We expect a rebound in September, and then the real test comes in Q4/Q1, when surveys point to a clear move above 3 per cent year-on-year,” Mr Shepherdson added.

The data knocked the dollar in the minutes after the report, with the euro leaping to reach a 0.5 per cent gain on the day above $1.1965, The buck dropped by 0.35 per cent on the day against the yen, to Y109.56. US stock futures also extended their gains.

Despite an upward revision to second-quarter growth figures that showed US GDP expanding at an annualised 3 per cent — its fastest pace since the beginning of 2015 — the disappointing jobs and wage growth could cloud the outlook for the Federal Reserve as it mulls whether to lift interest rates for a third time this year as inflation continues to undershoot its 2 per cent target. However, some economists argue that the data is unlikely to deter the Fed from announcing the start of its balance sheet unwind this month.

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