NEW YORK: The pace of hiring in the United States slowed in August, but the dropoff probably wasn’t weak enough to force the Federal Reserve to reconsider plans to raise interest rates this year as the unemployment rate fell to the lowest level since 2008.
The U.S. added 173,000 jobs last month, marking the smallest increase since March and the second smallest gain of the year, the government reported Friday. Economists surveyed by MarketWatch had expected a seasonally adjusted 213,000 increase in nonfarm jobs.
Offsetting slower job creation last month, the pace of hiring in July and June was stronger than initially reported, according to a survey of business establishments. The Labor Department said 245,000 new jobs were created in July instead of 215,000. June’s gain was revised up to 245,000 from 231,000.
Wages also picked up last month, perhaps a sign that falling unemployment and scattered labor shortages are pressuring more companies to increase pay. That could also help gin up the economy.
The nation’s unemployment rate, meanwhile, fell to 5.1% from 5.3%, marking the lowest level since April 2008 just as the Great Recession was setting roots. The jobless rate is determined by a separate survey of households that showed a sharp 237,000 drop in the number of people who said they were unemployed. Only a smattering of people dropped out of the labor force.
“Looked at over the last several months the economy seems to be chugging along,” said Andrew Chamberlain, chief economist of Glassdoor, a jobs and recruiting website.
U.S. stock markets, however, fell sharply Friday after the jobs report, suggesting investor believe a rate hike is imminent. Higher rates draw more money away from equities.
The Fed had been plotting to raise a key short-term U.S. interest rate known as fed funds as early as September. The rate has been frozen near zero since 2008 in an effort to boost economy by making it cheap for consumers and businesses to borrow.
Central bankers might discount the August report because of frequent problems related to seasonal adjustments. The government’s preliminary estimate of new jobs in August has been widely off the mark the past five years, consistently underestimating the level of hiring. Large numbers of people being on vacation lowers the response rate to federal surveys asking households and businesses about their labor status.
“Payrolls were weaker than generally expected, but there has been a clear tendency for the August data to be underreported initially and then revised up later,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Still, a mixed August jobs report could give the Fed more reason to wait to raise interest rates amid fresh worries about a rout in global stock markets and a slowing China economy. The Asian giant’s heady growth has helped prop up the global economy since the Great Recession ended more than six years ago.
The bulk of the hiring in August — one-third of all new jobs — took place in health care. Financial companies and restaurants also boosted payrolls.
Yet manufacturers and energy producers cut jobs, the result of cheap oil prices and a stronger dollar that’s made U.S. exports harder to sell.
All in all, though, the economy continues to produce a steady batch of new jobs. The U.S. has added an average of 212,000 jobs a month in 2015 and the economy is on track to generate more than 2 million jobs for the fifth year in a row.
The improvement in the labor market also appears to be nudging more companies to increase pay to attract or maintain workers. The average hourly wage paid to American workers rose 8 cents, or 0.3%, in August to $25.09 an hour.
From August 2014 to August 2015 hourly wages rose 2.2%, matching the best gain of the past four years.
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