US economy adds 173,000 jobs in August

US economy-business-people re-el magazine

5 September 2015

Tags:business, business news  financial news, business finance, small business websites

The US added 173,000 jobs in August, the Department of Labor said on Friday, in the last unemployment report before September’s interest rate decision by the Federal Reserve.

That was below the 217,000 predicted by analysts, although the Labor Department said that figures for August tend to be revised higher subsequently.

The unemployment rate fell to 5.1% – down from the July figure of 5.3%.

The rate is the lowest since April 2008.

Wall Street headed lower following the numbers.

European stock markets, which had been trading lower before the data was released, extended their losses, with the FTSE 100 in London closing down by 2.44% and indexes in Paris and Frankfurt dropping by 2.81% and 2.71% respectively.

’50-50 toss up’

There were upward revisions to the number of jobs created in the previous two months, which added another 44,000 jobs. The revised figure for July was 245,000 jobs.

The weaker-than-expected August number could make Fed officials think twice about increasing rates when they meet on 16-17 September.

On Twitter, BBC economics editor Robert Peston said it was “inconceivable” that the Fed would now raise rates this month given the jobs data and slowdown in emerging markets such as China.

Paul Ashworth, chief US economist at Capital Economics, said the report was “fairly mixed and can be used to make a case for or against a rate hike”, adding: “The September meeting is a 50-50 toss-up.”

Rob Carnell at ING bank said: “We don’t think it is sufficiently strong enough for the Fed to proceed with a September rate hike without markets worrying that the data is not good enough to support it.”

Chris Williamson, chief economist at Markit, said: “The most likely scenario is one where the Fed waits a little longer in the light of recent economic and financial market instability, instead merely testing financial market reactions with rhetoric that a rate rise is increasingly imminent.”

Andrew Walker, economics correspondent

For financial markets the big question about the jobs report is how it will affect the Fed’s decision on whether to raise interest rates later this month.

The low headline unemployment rate and the rise in earnings help keep the possibility alive.

But the number of new jobs was below expectations and a wider measure of “labour underutilisation” – which includes people not looking for work and part-timers who want longer hours – is relatively high.

Then there is all the recent global financial market volatility. A rate rise this month is far from certain.

One of the officials who will help make that decision said earlier on Friday that the US labour market had recovered sufficiently to warrant raising rates soon.

Richmond Fed President Jeffrey Lacker, who had called for a rate increase in June, said the US economy no longer needed rates to be so low.

He said after the numbers were released that he would going into the rate meeting “with an open mind”.

Tags:business, business news  financial news, business finance, small business websites





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