WASHINGTON, United States (AFP) – by Douglas Gillison
The US labor market slowed precipitously in August but continued a six-year streak of monthly job creation, according to figures released Friday by the Labor Department.
The economy added 151,000 new positions for the month, a sharp drop from July’s revised total of 275,000 new non-farm positions and also well below analyst expectations.
Leading up to Friday’s disclosure, markets had been intently awaiting the new numbers as a signal of looming interest rate hikes by the Federal Reserve.
However, it was not immediately clear how August’s employment results were likely to influence the Fed’s thinking. Analysts disagreed as to whether the jobs numbers presaged a rate hike as soon as this month.
As August’s added jobs were easily absorbed by the growth in the size of the labor force, the results appeared to tread water: The unemployment rate remained steady at 4.9 percent for the third month in a row. The number of long-term unemployed was also unchanged at 2 million people.
Nariman Behravesh, chief economist at IHS Markit, said the figures implied that unemployment was likely to remain at that level in the near-term, pointing to a “a steady, if unexciting, cruise speed” for economic growth of between 2 and 2.5 percent.
The numbers came as US President Barack Obama headed to China to join world leaders at the Group of 20 economic summit and as world leaders faced calls to stimulate dismal global growth. The International Monetary Fund said Thursday it expected to downgrade its US economic forecast for 2016 next month.
As for the Fed’s actions when it reviews monetary policy in this third week of September, the outcome appeared to be a tossup.
“Most members will view this report as consistent with solid economic activity and will believe that activity will continue to pull inflation upward toward their target,” Rob Martin and Michael Gapen of Barclays said in a research note, which predicted a September rate increase.
Joel Naroff of Naroff Economic Advisors disagreed: “If Janet Yellen and her merry band of terrified rate hikers wanted a strong jobs report to give them cover to raise rates in September, they didn’t get it,” he wrote in a note to clients.
The mining sector, dominated by the oil industry, continued to shed jobs since reaching a peak in 2014, losing 4,000 more positions in the month. Employment levels in industries such as construction, manufacturing, retail and transportation were flat.
However, other sectors continued to trend higher, with gains in health care, which added 14,000 more jobs, food and services, which added 34,000 positions, and the financial sector, which rose by 15,000, the Labor Department said.
Average hourly earnings rose a meager 3 cents to $25.73, putting them up 2.4 percent for the year.
The University of Michigan economist Justin Wolfers said the figures showed the US economy continued on a healthy upward path but that there were scant signs of inflationary pressures.
“It’s now a sure thing that the economy will be moving forward — looking healthy and showing at least some momentum — come Election Day,” he said.
July’s strong report had produced near euphoria on its release, instantly seen as a boon to the campaign of Democratic presidential nominee Hillary Clinton, with her rival Donald Trump at pains to emphasize negative aspects.
The Trump campaign swiftly seized on August’s lower numbers on Friday to blast his rival, formerly secretary of state under Obama, and the administration’s record on the economy.
The new positions themselves offered scant stability or prospects to workers, the Trump campaign said.
“Over a third are low-paying service jobs in sectors such as retail and restaurants that won’t support a family, pay for a home or put children through college,” it said in a statement.
US equities markets reacted by pushing modestly higher on Friday toward 1500 GMT, with the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all up about 0.5 percent.
The yield on one-year US Treasury bills was unchanged while ten-year Treasury yields were up 0.5 percentage points over Thursday.