U.S. nonfarm payrolls rose by 151,000 jobs in August, unemployment rate unchanged at 4.9%
U.S. employment growth slowed more than expected in August after two straight months of robust gains and wages were tepid, which could effectively rule out an interest rate increase from the Federal Reserve this month.
Nonfarm payrolls rose by 151,000 jobs last month after an upwardly revised 275,000 increase in July, with hiring in manufacturing and construction sectors declining, the Labor Department said on Friday. The unemployment rate was unchanged at 4.9 percent as more people flocked to the labor market.
The report came on the heels of news on Thursday that the manufacturing sector contracted in August for the first time in six months, which had already cast a shadow on a rate hike at the Fed’s Sept. 20-21 policy meeting.
Last month’s jobs gains, however, could still be sufficient to push the U.S. central bank to tighten policy in December.
“It reduces the likelihood that the Fed will raise rates in September, but the labor market remains strong enough to support a rate hike in December,” said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina.
Economists had forecast payrolls increasing 180,000 last month and the unemployment rate slipping one-tenth of a percentage point to 4.8 percent. The payrolls rise reinforces views the economy has regained speed after almost stalling in the first half of the year.
Rate hike probabilities for both the September and December meetings rose after remarks last Friday by Fed Chair Janet Yellen that the case for raising rates had strengthened in recent months.
Financial markets on Friday were pricing in a roughly 21 percent chance of a rate hike this month and a 54.2 percent probability in December, according to the CME Fedwatch tool.
A Reuters survey of the big banks that do business directly with the Fed showed 13 of the 14 so-called primary dealers expect a rate increase this year, with only three anticipating the move this month.
