Reuters – U.S. job growth slows, unemployment rate falls to 5.1 percent

Commentary, News

U.S. payrolls rose less than expected in August, but a drop in the unemployment rate to a near 7-1/2-year low of 5.1 percent and an acceleration in wages kept alive prospects of a Federal Reserve interest rate hike later this month.

Nonfarm payrolls increased 173,000 last month as the manufacturing sector lost the most jobs since July 2013, the Labor Department said on Friday. It marked a slowdown from July’s upwardly revised gain of 245,000 and was the smallest rise in employment in five months.

The report, however, may have been tarnished by a statistical fluke that in recent years has frequently led to sharp upward revisions to payroll figures for August after initial weak readings.

Indicating that the slowdown in job growth was likely not reflective of the economy’s true health, payrolls data for June and July were revised to show 44,000 more jobs created than previously reported. In addition, average hourly earnings increased 8 cents, the biggest rise since January, and the workweek rose to 34.6 hours.

“The payrolls data is certainly good enough to allow for a Fed rate hike in September, the big question is still whether financial market volatility will scupper the plans,” said Alan Ruskin, global head of currency strategy at Deutsche Bank in New York.

The dollar trimmed losses against a basket of currencies after the data, while prices for U.S. Treasury debt pared gains.

While the report may not change views that the U.S. economy remains vibrant amid volatile global financial markets and slowing Chinese growth, it could further complicate the Fed’s decision at a policy meeting on Sept. 16-17.

Read the full article at Reuters.com


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