US job growth slows in August; wage growth retreats

WASHINGTON • US non-farm payrolls have come in well below expectations, with 156,000 jobs added last month after two straight months of strong gains.

The consensus among economists was 180,000 jobs.

Still, the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio.

Anaemic wage gain could, however, make the US central bank cautious about raising interest rates again this year.

The Labour Department said yesterday that non-farm payrolls increased by 156,000 last month after rising 189,000 in July.

The unemployment rate ticked up one-tenth of a percentage point to 4.4 per cent.

Average hourly earnings rose three cents or 0.1 per cent after advancing 0.3 per cent in July, keeping the year-on-year gain in wages at 2.5 per cent for a fifth consecutive month.

Last month's moderation in employment growth, which pushed payroll gains below the 176,000 monthly average for this year, likely reflects a seasonal quirk as well as a dearth of qualified workers.

Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.

The department said Hurricane Harvey, which devastated parts of Texas, has no "discernible" effect on payrolls as the disaster struck after the survey period for the August employment report.

Economists said the storm could hurt payrolls for this month if the disruption from the flooding lingers.

Last month's gains were far more than the 75,000 to 100,000 jobs per month needed to keep up with growth in the working-age population.

Underscoring labour market strength, manufacturing payrolls surged by 36,000 jobs last month. Construction employment jumped by 28,000 jobs.

On the back of this jobs report, US short-term interest rate futures rose slightly yesterday, reflecting the expectation that the Federal Reserve will not raise interest rates before mid-2018.

Traders continue to see the Fed as likely to wait until at least next June to raise interest rates again.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 02, 2017, with the headline 'US job growth slows in August; wage growth retreats'. Print Edition | Subscribe