WASHINGTON — U.S. job
growth slowed in August as employers added 156,000 jobs, though
still enough to suggest that most businesses remain confident in an
economy now in its ninth year of recovery from the Great Recession.
The unemployment rate ticked up from 4.3 percent to a still-low 4.4
percent, the Labor Department said Friday. The government also
revised down its estimate of job growth in June and July by a
combined 41,000, leaving an average monthly gain this year of a
Taken as a whole, Friday's jobs report pointed to an economy that is
still steadily generating jobs, though at a less brisk pace than it
did earlier in the recovery from the recession. With fewer people
looking for work, fewer jobs are being filled.
In addition, monthly jobs reports can be volatile — especially
figures for August, when employers are gearing up for the start of
fall and the government can't always precisely factor the changes
into its employment data.
"It's more noise than signal," Joe Brusuelas, chief economist at tax
consultant RSM, said of Friday's report. "Focus on the longer-term
trend of growth in employment."
One persistent soft spot in the job market is pay raises, which
remain tepid. Average hourly pay rose just 2.5 percent over the 12
months that ended in August. Wage growth typically averages 3.5
percent to 4 percent annually when unemployment is this low.
The economy has grown at a subpar annual pace of 2.1 percent during
the first six months of 2017. Still, the August jobs report comes as
Americans have grown more optimistic. A measure of consumer
confidence in August hit its highest level in 16 years, the
Conference Board said this week.
Inflation is low. Consumer spending in July rose at its fastest pace
in three months. The stock market is up 10 percent so far this year.
One measure of factory orders suggests that business investment is
Even the traumatic damage caused by Hurricane Harvey around the
Houston region may not break the national economy's stride. Gasoline
prices are rising as the flooding from Harvey knocked out refineries
and ports, but rebuilding efforts in the coming months could provide
a stimulative benefit.
Gus Faucher, chief economist at PNC Financial, predicts that job
growth in the coming months "will weaken substantially" in the wake
of Harvey, only to rebound quickly as workers who were temporarily
laid off are rehired.
Overall, hiring this year has averaged 176,000 a month, roughly in
line with 2016's average of 187,000. August was the 83rd straight
month of job gains.
The slowing job gains, coupled with uncommonly low inflation, might
make the Federal Reserve hesitant to raise its key short-term
interest rate by December, when many Fed watchers had foreseen the
next rate hike.
"The Fed has to be second-guessing December," said John Silvia,
chief economist at Wells Fargo.
Silvia said he thinks the economic effects of Harvey will likely
begin to surface in the coming months for reports on industrial
production, retail sales and applications for unemployment benefits.
The August jobs report showed that roughly the same proportion of
people last month as in July either had a job or were looking for
one. Anyone not actively looking for a job isn't considered part of
the labor force and isn't counted as unemployed. This so-called
labor force participation rate held at 62.9 percent.
The participation rate has tumbled from 66 percent over the past
decade, but the decline reflects in part an aging U.S. population
that is retiring. Some economists say that in light of that trend, a
stable participation rate is a positive sign for the economy.
One of the leading sources of job growth last month was
manufacturing, which added 36,000. An additional 28,000 jobs came
from construction and 20,200 from the health care sector. By
contrast, governments shed 9,000 jobs.
But increased consumer sentiment failed to increase retail hiring.
Restaurants and bars — often a major source of hiring — added just
9,200 jobs. Retail stores and auto dealers added just 800 jobs after
having lost 1,900 in July.