United States: Payroll growth disappoints, but unemployment falls to 5.1% in August
September 4, 2015
Non-farm payrolls grew by 173,000 in August, which was below July’s upward revised increase of 245,000 (previously reported: +215,000). July’s result undershot market expectations of a 223,000 increase and suggests that the economy is recovering at a modest pace.
The private sector was responsible for the bulk of new hiring, having added 140,000 jobs in August. The largest gains were registered in healthcare and professional business services. The public sector added 33,000 jobs in August.
The unemployment rate—derived from a different survey—decreased from 5.3 in July to 5.1% in August. The print beat market expectations of a fall to 5.2% and marked the best reading since April 2008. The unemployment rate inched below the Fed’s target zone of 5.2%-5-5%, although the labor participation rate is still low. Average hourly earnings increased only 0.3% percent over the previous month.
The upward revision to July’s payroll figure and the healthy, albeit weaker-than-expected payroll growth in August, combined with the steady decline in the unemployment rate observed this year, may give the Fed sufficient confidence to make an initial interest rate hike at its meeting later this month.
Author: Carl Kelly, Economist