Job Growth in the U.S. slowed during August, but the rate of unemployment dropped to close to a low of 7 ½ years, while wages moved higher, keeping the prospects alive of a interest rate increase by the Federal Reserve later in September.
Nonfarm payrolls were up 173,000 during August, after a revised upward July gain of 245,000, said the Labor Department on Friday.
The gain in August was the least in the past five months as the most jobs lost were in the factory sector.
The jobs count might have been somewhat tarnished by a statistical fluke which has often led to revisions that are sharply increased upward for August following readings that are weak initially.
That would indicate the hiring slowdown was more than likely not a reflection of the true health of the economy. The unemployment rate dropped two tenths of one percent to end August at 5.1%, which is the lowest it has been since August of 2008.
In addition, data for payrolls for both June and July received an upwards revision to show 44,000 additional jobs were added between the two months. Also, the average earnings per hour increased by 8 cents, which is the largest rise since this past January, while the length of an average work week grew.
The payrolls information is good enough for a rate hike by the Fed in September, said a Wall Street analyst. The big question is whether the volatility in the financial market will hurt the Fed’s plans he added.
Investors were in agreement as U.S. stocks, which might be pressured by the higher rates, opened on Friday lower, while yields on government debt in the U.S. increased. The dollar moved higher as well against a basket of different currencies.
While the report did very little in altering views that the economy remained vibrant even though financial markets worldwide have been volatile and growth in China was slowing, in might further complicate the decision by the Fed in their meeting on September 16 and 17.