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 Nonfarm payrolls increased 142,000 last month after expanding by
212,000 in July, the Labor Department said on Friday. The jobless
rate fell one-tenth of a percentage point to 6.1 percent, but that
was partly because people dropped out of the labor force.
"Fed Chair Janet Yellen will be able to use the weakness to hold off
hawks who would like to raise rates soon," said Diane Swonk, chief
economist at Mesirow Financial in Chicago.
Data for June and July 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, although a workforce disruption at a grocery store chain
in New England weighed on the count.
Even though job growth slowed, the report still suggested that some
of the slack in the labor market was being taken up.
U.S. stocks ended higher, notching a fifth straight week of gains.
Prices for U.S. Treasury debt rose marginally, while the dollar was
little changed against a basket of currencies even though economists
had expected payrolls to rise by 225,000.
Interest rate futures, which had pointed to a likely rate hike in
June of next year, rose to suggest less of a chance. Nevertheless, a
Reuters poll of top bond firms found nine of 17 looked for an
increase in borrowing costs in the second quarter; a poll a month
ago showed only six of 19 expected such a move.
Swonk and other economists questioned whether the data was
presenting an accurate picture given that it was at odds with other
bullish labor market indicators.
They noted that first-time applications for unemployment benefits
are hovering near pre-recession levels, that manufacturing and
service sector surveys showed strong jobs growth in August, and that
household perceptions of the labor market had brightened
significantly.
In addition, difficulties adjusting the data for seasonal
fluctuations have tended to understate job growth in August, and the
end of a mass employee walkout at the grocery chain Market Basket
could lead to a bounce in retail employment this month.
"The fundamentals in the economy remain solid, this is one month,
and the economy should continue to expand at a decent pace in the
second half of 2014," said Gus Faucher, a senior economist at PNC
Financial Services in Pittsburgh.
NUMBER OF LONG-TERM UNEMPLOYED EASES
Yellen has expressed concern about sluggish wage growth, the
still-elevated number of Americans working part-time even though
they want full-time employment, and Americans still suffering from
long spells of joblessness.
The U.S. central bank, which has held benchmark interest rates near
zero since December 2008, has pointed to these metrics as evidence
of "significant underutilization" of labor market resources that
merits a stimulative monetary policy.
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The labor force participation rate, or the share of working-age
Americans who are employed or at least looking for a job, fell to
62.8 percent in August from 62.9 percent in July. Before the United
States fell into recession, it stood at 66.0 percent.
A paper published on Thursday by the Brookings Institution, a
Washington-based think tank, suggested the decline was primarily due
to an aging population and other structural factors, and concluded
the labor force would continue to shrink.
Other metrics on Yellen's so-called dashboard, however, showed
improvement.
A broad measure of joblessness that includes people who want to work
but have given up searching and those working part-time because they
cannot find full-time employment fell to 12.0 percent, the lowest
level since October 2009.
The gap between that figure and the official unemployment rate
narrowed, a further sign of tightening labor market conditions. At
the same time, the number of long-term unemployed Americans was the
lowest since January 2009.
Average hourly earnings rose 6 cents in August, which marked an
acceleration from July. Still, the year-on-year change held at 2.1
percent, which suggests little buildup of wage-related inflation
pressure.
The Fed next meets on Sept. 16-17 to debate the course of monetary
policy.
Jobs in the private sector increased 134,000 after rising by 213,000
in July. Government employment increased 8,000 as state governments
hired teachers at the start of the new school year.
But manufacturing payrolls were the weakest in a year. The sector
had added a hefty 28,000 jobs in July, which reflected a decision by
automakers to keep assembly lines running in the summer. Auto
payrolls fell 4,600, the first decline since March.
Construction employment advanced 20,000, the eighth straight monthly
gain.
The 8,400 jobs lost among retailers reflected a drop of more than
17,000 in food and beverage store payrolls.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci, Tim Ahmann
and Paul Simao)
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