WASHINGTON • United States employment growth slowed more than expected last month after two straight months of robust data and wage gains moderated, which could effectively rule out an interest rate increase from the Federal Reserve this month.
Non-farm payrolls rose by 151,000 jobs last month after an upwardly revised 275,000 increase in July, with hiring in the manufacturing and construction sectors declining, the Labour Department said yesterday. The unemployment rate was unchanged at 4.9 per cent as more people entered the labour market.
Markets reacted positively to the data, which would eliminate the possibility of an interest rate hike this month, with the Dow up 96.84 points, or 0.53 per cent at the opening. The S&P 500 was up 0.47 per cent at 2,180.96, and the Nasdaq Composite was up 0.37 per cent at 5,246.32. Oil prices rose about 2 per cent after the report weighed on the greenback.
Economists had forecast payrolls rising by 180,000 last month and the unemployment rate slipping one-tenth of a percentage point to 4.8 per cent.
Last month's figure was consistent with an easing of payrolls growth so far this year as the economy slogs through a period of weak investment and some companies have difficulty finding workers.
"This expansion is getting long in the tooth, so it shouldn't be too surprising that trend job growth would begin to moderate," Mr Ryan Sweet, a senior economist at Moody's Analytics, said before the report.
The gains could still be sufficient to push the Fed to raise interest rates in December. The rise in payrolls reinforces views that the economy has regained speed after almost stalling in the first half of the year.
The report comes some two weeks before the US central bank's Sept 20-21 meeting. Rate hike probabilities for both the September and December meetings rose after remarks last Friday by Fed chair Janet Yellen that the case for raising rates had strengthened in recent months.
The Fed lifted its benchmark overnight interest rate at the end of last year for the first time in nearly a decade, but has held it steady since amid concerns over persistently low inflation. The step-down in employment comes after the economy created a total of 546,000 jobs in June and July. With the labour market near full employment and the economy's recovery from the 2007-2009 recession showing signs of ageing, a slowdown in job growth is normal.
Dr Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.
Over the last several years, the government's August payrolls estimates have been weak, only to be subsequently revised higher. 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.
Average hourly earnings increased 0.1 per cent last month after a solid 0.3 per cent rise in July. The moderation in gains, which reflects a calendar quirk, pulled down the year-on-year gain to 2.4 per cent from 2.6 per cent in July.