U.S. employment growth slowed more than expected in August after two straight months of robust gains and wage gains moderated, which could effectively rule out an interest rate increase from the Federal Reserve this month. The US NonFarm Payrolls August 2016 is at 151.000, ForexSQ forex experts say the U.S. NonFarm Payrolls Aug 2016 is a bad news for US economy. Unemployment rate August 2016 is at 4.9%.
US NonFarm Payrolls August 2016
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Nonfarm payrolls rose by 151,000 jobs last month after an upwardly revised 275,000 increase in July, with hiring in manufacturing and construction sectors declining, the Labor Department said on Friday. The unemployment rate was unchanged at 4.9 percent as more people entered the labor market.
Economists had forecast payrolls rising 180,000 last month and the unemployment rate slipping one-tenth of a percentage point to 4.8 percent. Last month’s jobs gains, however, 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 more than two weeks before the U.S. central bank’s Sept. 20-21 policy 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 labor market near full employment and the economy’s recovery from the 2007-09 recession showing signs of aging, a slowdown in job growth is normal. Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.
The smaller-than-expected rise in payrolls also likely reflects difficulties adjusting the data for seasonal fluctuations. Over the last several years, the government’s August payrolls estimates have been weak only to be subsequently revised higher.
The timing of the next rate hike could also be determined by wage growth. Average hourly earnings increased three cents or 0.1 percent in August after a solid 0.3 percent rise in July.
The moderation in gains, which reflects a calendar quirk, pulled down the year-on-year gain to 2.4 percent from 2.6 percent in July.
Americans worked fewer hours last month, with the average workweek dipping to 34.3 hours from 34.4 hours in July.
Other details of the report showed the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, unchanged at 62.8 percent last month.
The participation rate remains near multi-decade lows, in part reflecting demographic changes, and economists say this partially explains why wage growth has been sluggish.
The solid payrolls gain added to July consumer spending, residential construction and durable goods orders in suggesting a pick up in economic growth after output rose 1.0 percent in the first half of the year.
The Atlanta Fed is forecasting gross domestic product rising at a 3.2 percent annual rate in the third quarter. Last month, manufacturing sector employment fell 14,000 after rising for two straight months. Construction payrolls slipped 6,000, while mining shed a further 4,000 jobs in August.
Government payrolls rose 25,000 in August, extending the streak of job gains in the public sector to four months.
US NonFarm Payrolls Aug 2016 Rise by 151,000; Jobless Rate Steady
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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 called for 180,000. The jobless rate and labor participation rate held steady, while wage gains moderated and hours worked were the lowest since 2014.
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.
“While it’s still a decent pace of job growth, I think the optics of it is not particularly compelling, to the extent that it reflects a sharp deceleration in the pace of labor-market momentum,” said Millan Mulraine, deputy head of U.S. research and strategy for TD Securities USA LLC in New York, who projected a 153,000 gain.
The 89 estimates 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.
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, the lowest since 2014 and the first drop in six months.
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.
Employment slowed at private service providers, with payrolls in professional and business services posting the smallest gain since a decrease in January. Retail jobs rose by 15,100.
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 ended in June. Economists see growth picking up to 2.7 percent in the third quarter.
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.” ForexSQ forex news team use Reuters and Bloomberg as source of this article.
