U.S Payrolls Rise by 151,000 in August

Companies kept adding to payrolls in August while measures of slack in the labor market were little changed, signaling steady hiring in the face of lackluster global growth.

Payrolls climbed by 151,000 last month following a 275,000 gain in July that was larger than previously estimated, a Labor Department report showed Friday in Washington. The median forecast in a Bloomberg survey called for 180,000. The jobless rate and labor participation rate held steady, while wage gains moderated.

The August figure is consistent with a simmering-down of payrolls growth so far this year as the economy slogs through a period of weak investment and some companies have difficulty finding workers. Federal Reserve officials will have to weigh the jobs data as they decide whether to raise the benchmark interest rate for the first time in 2016.

“This expansion is getting long in the tooth, so it shouldn’t be too surprising that trend job growth would begin to moderate,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said before the report.

The 89 estimates in the Bloomberg survey ranged from gains of 92,000 to 255,000 after a previously reported 255,000 July increase. Revisions subtracted a net 1,000 jobs from overall payrolls in the previous two months, as June’s increase was cut to 271,000 from 292,000.

August Curse

The payrolls data were contending with a pattern of August disappointment, with the survey median overshooting the first print for the month in each of the last five years, by an average 47,000. Low response rates in a popular vacation month and difficulty adjusting for seasonal effects at the start of the school year could be to blame.

The unemployment rate, which is derived from a separate Labor Department survey of households, was 4.9 percent for a third month, as the labor force increased, with a little more than half of those entering finding work. The participation rate, which indicates the share of working-age people who are employed or looking for work, was also unchanged at 62.8 percent.

The government’s underemployment rate held at 9.7 percent, as the number of people working part-time for economic reasons rose slightly, according to Friday’s report. Some 6.05 million American employees were in part-time jobs but wanted full-time work, up from 5.94 million in the prior month.

Wage Growth

Average hourly earnings rose 0.1 percent from a month earlier to $25.73, following a 0.3 percent increase in the prior month. The year-over-year increase was 2.4 percent, compared with 2.7 percent in the 12 months through July.

The average work week for all workers decreased by 6 minutes to 34.3 hours in July.

Factories cut payrolls by 14,000, the most in three months. Employment at construction companies fell for the fourth time in the last five months.

Analysts see the economy regaining momentum after a weak first half of 2016. Gross domestic product climbed at a 1.1 percent annualized rate in the three months ending in June. Economists see growth picking up to 2.7 percent in the third quarter, according to Bloomberg survey estimates.

A sustained slowdown in hiring would raise questions about America’s consumer-driven expansion as the Fed debates whether to raise interest rates as soon as this month, or to wait until later this year. Chair Janet Yellen said last week that the case for rate hikes “has strengthened in recent months.”

BLOOMBERG

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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