(MENAFN- The Peninsula) US employers hired the fewest number of workers in eight months in August and more Americans gave up the hunt for jobs, providing a cautious Federal Reserve with more reasons to wait longer before raising interest rates.
Nonfarm payrolls increased 142,000 last month, the Labor Department said yesterday. The unemployment rate fell one-tenth of a percentage point to 6.1 percent as people dropped out of the labour force.
June and July data were revised to show 28,000 fewer jobs created than previously reported. In addition, manufacturing saw no job growth and retail payrolls declined for the first time since February.
"Clearly its disappointing, but the preponderance of evidence is that the economy is still gaining a lot of traction," said Russell T. Price, senior economist at Ameriprise Financial in Troy, Michigan.
US stock index futures pared losses on the data as traders reduced bets for an early interest rate increase. US Treasury debt yields fell to session lows and the dollar fell against a basket of currencies.
Interest rate futures, which had been pointing to a likely rate hike in June of next year, rose to suggest less of a chance. However, they still showed dealers expect the Fed to bump up borrowing costs in July. Economists had expected payrolls to increase 225,000 in August and the unemployment rate to fall to 6.1 percent.
The surprise slowdown in job growth is at odds with labor market indicators such as first-time applications for unemployment benefits, which are hovering near their pre-recession levels.
In addition, manufacturing and service sector surveys showed strong employment growth in August and household perceptions of the labour market brightened significantly, which economists said were consistent with tightening conditions.
Some economists had cautioned that payrolls could miss expectations, noting that August is a generally weak month because of problems adjusting the data for seasonal variations.
The trend in the past has been for the government to revise August payrolls higher.
Fed Chair Janet Yellen is concerned about sluggish wage growth, the still-elevated numbers of Americans working part-time even though they want full-time employment, and Americans still suffering from a long spell of joblessness. The US central bank has pointed to these metrics as evidence of "significant underutilisation" of labour market resources that merits a stimulative monetary policy.
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