U.S. adds 130,000 jobs August, dropping below expectations

U.S. adds 130,000 jobs August, dropping below expectations”

Last month's jobs figure was originally reported at 164,000, now revised down to 159,000, and unemployment was 3.7 percent.

US employers are expected to have hired at another healthy pace in August, a trend that could power the economy through a rough patch stemming from a global slowdown and the Trump administration's trade war with China.

The U.S. central bank lowered borrowing costs in July, citing growing risks to the economy, now in its 11th year of expansion, from the trade fight and slowing global growth. Expectations were for the number of jobs to increase by 170,000.

"With slower, but still-solid job gains and good wage growth, households will continue to spend", Gus Faucher, chief economist at PNC, said. "Consumers are what's keeping the economy moving at this point".

That, together with a contraction in manufacturing employment, suggests nonfarm payrolls probably increased at a steady clip in August, even though the ADP National Employment Report on Thursday showed private payrolls surging by 195,000 jobs this month after rising by 142,000 in July. Ahead of this morning's jobs report, most projections pointed to growth in August of 160,000 jobs. U.S. Treasury prices fell and the dollar slipped against a basket of currencies.

Unemployment was expected to remain unchanged.

August's figures were also boosted by the United States government hiring 25,000 temporary workers to conduct its 2020 national census.

Job gains have averaged 156,000 over the last three months, but still above the roughly 100,000 per month needed to keep up with growth in the working age population.

Trader Peter Tachman works on the floor of the New York Stock Exchange (NYSE) on August 23, 2019 in New York City. But the annual increase in wages dipped to 3.2 percent from 3.3 percent in July as last year's surge dropped out of the calculation. But factory payrolls could surprise on the downside after the ISM reported on Tuesday that its gauge of factory employment dropped in August to its lowest level since March 2016. The average workweek rose to 34.4 hours in August from 34.3 hours in July. A measure of hours worked, which is a proxy for gross domestic product, increased 0.4% after falling 0.2% in July.

"This is indicating that firms aren't yet reducing labor input at the intensive margin", said Michael Feroli, an economist at JPMorgan in NY. And more Americans entered the workforce in August, a positive development that increased the proportion of adults who are either working or seeking work to its highest level since February.

Manufacturing employment rose by a tepid 3,000 jobs last month after increasing 4,000 in July. Consumer spending rose in the April-June quarter by the most in five years.

The slowdown in hiring last month was across all sectors, with the exception of government, which was boosted by recruitment for the 2020 census.

Economists polled by Reuters had forecast the index would rise to 54.0 in August.

Construction payrolls increased by 14,000 jobs after slipping by 2,000 in July.

Economists and financial analysts have anxious publicly about the possibility of a forthcoming economic downturn, particularly since the yield curve inverted last month, and a steady decline in job growth doesn't do much to alleviate their fears.

Manufacturing has ironically borne the brunt of the Trump administration's trade war, which the White House has argued is meant to boost the sector. "But the jobs report, despite its somewhat mixed messages, isn't and shouldn't send them into panic mode".

The modest result in August was attributed mainly to declines in retail and transportation employment. Notable job gains also occurred in health care and financial activities, while mining lost jobs.

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