United States: August payrolls growth undershoots expectations
September 6, 2013
Non-farm payrolls grew by 169,000 in August, which was more than July's revised increase of 104,000 (previously reported: 162,000). Nevertheless, the reading was below market expectations of a 175,000 rise.
The private sector is still almost entirely responsible for new hiring, having added 152,000 jobs in July. The largest gains were registered in retail, healthcare, as well as in professional and business services. Meanwhile, the public sector added just 17,000 jobs.
The U.S. economy has recovered 6.8 million jobs since February 2010, which marked the trough in the labor market crisis. The economy still has roughly 2 million fewer jobs than it had during the January 2008 peak despite the ongoing improvement in the past three years.
The unemployment rate - derived from a different survey - dropped slightly from 7.4% in July to 7.3% in August, marking the lowest level in more than four years. The reading was in line with market expectations. The drop in unemployment, which occurred despite lower than expected payroll gains, is driven in part by the continuing decline in labor force participation rates. The participation rate currently sits at 63.2%, the lowest level since August 1978.
FocusEconomics Consensus Forecast panelists expect unemployment to average 7.5% this year, which is unchanged from last month's forecast. For 2014, the panel expects the unemployment rate to drop to 7.0%.
Author: Carl Kelly, Economist