The unemployment rate fell to 5.1% – down from the July figure of 5.3%.
A Reuter’s analysis found that August employment reports between 2005 and 2014 often underestimated jobs growth initially and were revised up by on average 58,000 jobs in the next month’s report. The payrolls gain for July was revised up to 245,000 from 215,000. “There is some concern a rate hike will choke off potential growth, but we simply aren’t seeing the movement to indicate that in the near-term”.
Global markets dropped sharply lower Friday as investors processed a mixed jobs report that didn’t clear up uncertainty on whether the Federal Reserve will raise interest rates later in September.
According to the recent minutes of the FOMC, most Fed officials believed the economic conditions were approaching the point for policy firming, especially on the employment side. The unemployment rate dropped to 5.1 percent while the number of unemployed persons in the nation fell below eight million. Now the number stands at 58.2 percent. New York Fed president William Dudley said in late August that the market’s recent volatility made a September rate hike “less compelling”.
The Fed’s policy decision “will break down to how commodities react between now and the September meeting”, he said.
Such a trend could complicate the Federal Open Market Committee’s reading of the labor market and readiness to lift off from near-zero interest rates. If US Federal Reserve hikes interest rate, it’ll lead to rise in borrowing rates and other costs as well.
While data on the broader US economy has remained healthy, the USA central bank wants reasonable confidence that inflation will rebound in the medium term before it raises rates.
A key question is how the stock market turbulence and China’s troubles might affect the overall USA economy.
For months, Fed officials have been saying the economy appears to be getting strong enough to tolerate the first increase in interest rates in a decade.
Wage gains – an important indicator for inflation – remained muted, rising eight cents an hour to an average $25.09 from July, up 2.2 percent from a year ago. Over the past year, job growth has averaged 247,000 per month. Government jobs swelled by 30, 0000. The government struggles to seasonally adjust the data for the millions of summer jobs that are eliminated throughout the month.
The hiring has slowed as employers added 173,000 jobs in August, the lowest number registered during the past five months. It should be remembered that the stock market has benefited significantly from the availability of ultra -cheap cash and that has been feeding the bull market for long.
The job growth pace may not be as it used to be in 2014 as sluggishness in the oil and gas sector.
Still one positive sign for wage growth was that the economy added many high income jobs. Local school districts and state colleges added 31,900 workers.
“It’s a good start, but there’s much more work to be done”, he said. “We’re definitely in a hiring mode”, he said.