NEWS ALERT: New Jobs and the Fed

Abdur Chowdhury, Ph.D. Research Consulting Economist
September 2, 2016

Non-farm payrolls rose 151,000 in August. Private-sector employment rose 126,000, while government added the rest. Gains in private sector hiring came entirely from the services producing sector. While minimal, the oil and gas extraction sector added jobs for the first time in over a year.

The losses in manufacturing employment in August suggests that weakness in sectors exposed to the global economy and to domestic business investment persists. The unemployment rate held steady at 4.9% for the third straight month, as the household survey showed a much larger gain in labor force than the change in employment. Average hourly earnings grew 0.1%, but decelerated to 2.4% (from 2.6%) on a year-on-year basis.

On a trend basis, the labor market continued to make improvements. Given the end of summer, the job gain is about right where we would expect the U.S. economy to be at this stage in the cycle. With inflation remaining under target and wage growth decelerating, there is reason for the Federal Reserve to be patient in raising interest rates. The disappointing ISM report yesterday echoes this concern.

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Source: Bureau of Labor Statistics