US Employment Takes a Half-Step Backward in August

Luke Sharrett  Bloomberg

USA job growth slowed more than expected in August after two straight months of strong gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio.

Payroll employment rose a smaller-than-expected 156k in August with 41k worth of downward revisions to June and July gains combined. August was the 83rd consecutive month of job growth in the USA economy.

The leading source of job growth last month was manufacturing, which added 36,000. Construction employment jumped by 28,000 jobs last month.

The U.S. Labor Department will release its latest employment numbers today for the month of August. Average hourly earnings growth in the past year remained steady at 2.5%.

Gus Faucher, chief economist at PNC Financial, predicts that job growth in the coming months "will weaken substantially" in the wake of Harvey, only to rebound quickly as workers who were temporarily laid off are rehired. The unemployment rate was essentially unchanged at 4.4 percent; it had been at 4.3 percent.

Labor Department officials Friday made it clear that Harvey, which has pounded southeast Texas over the last week, had no effect on the jobs report because data were collected earlier in the month.

The economy expanded at a healthy 3% annual pace in the April-June quarter, a substantial increase from a weak 1.2% in the first three months of the year.

However, job figures in August are prone to being revised upwards at a later date and most analysts expect the Federal Reserve to keep to its plan of raising interest rates for the third time this year in December.

More Americans who've been out of work for long periods are rejoining the labor force in light of a near record number of job openings and that may also be holding down wages. In August, job gains occurred in computer systems design and related services (+8,000). Retailers hired just 800 workers. A rise in wages is seen by economists as portending an uptick in inflation, which has disappointed this year.

Wage growth also lagged at 3 cents for non-farm workers, compared to 9 cents in July.

After beginning to rise, wages returned to stubborn and nearly stagnant growth in August. The average workweek dipped 0.1 hour to 34.4 hours.

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