- Joel Naroff, chief economist at Naroff Economic Advisors
US job growth unexpectedly slowed in August, dimming prospects of a Fed interest rate hike in September, even as unemployment rate declines to the lowest level in more than seven years, while wages accelerated. Nonfarm payrolls increased 173,000 last month as the manufacturing sector lost the most jobs since July 2013, following an upwardly revised 245,000 rise in July, according to the Labor Department. It was the smallest gain in employment in five months, while economists had forecast nonfarm payrolls increasing by 220,000 in August. At the same time, the US jobless rate dropped to 5.1% versus a more modest decline to 5.2% expected by economists. The unemployment rate reached the range that most Fed officials think is consistent with a low but steady rate of inflation.
The US labour market is strengthening and adds to a slew of upbeat data, including reports on automobile sales and housing, that has indicated the world's number one economy was moving ahead with strong momentum early in the third quarter after expanding at a robust 3.7% annual rate in the April-through-June period. At the same time, the increase in hourly earnings left them 2.2% above their year-ago level, still well below the 3.5% growth rate economists consider healthy.
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