Business Insider | Akin Oyedele
The US unemployment rate is at a seven-year low.
The economy added 173,000 jobs last month, fewer than expected, while the unemployment rate fell to 5.1% from 5.3%, according to the Bureau of Labor Statistics.
We also got some wage growth, with average hourly earnings rising 0.3% month-over-month and 2.5% year-on-year.
The number of job gains in July was revised up to 245,000 from 215,000.
As we outlined earlier, this report was expected to hugely influence market expectations for whether the Federal Reserve will raise interest rates at its meeting later this month. A strong report was seen to support other data we’ve recently received that show the economy is advancing at a steady pace — probably steady enough to warrant the first rate increase in a decade.
In a speech just before the jobs report, Richmond Fed president Jeffrey Lacker said the labor market supported the case for raising rates sooner rather than later. But this report was unlikely to “materially alter the labor market picture or, for that matter, the monetary policy outlook.”
Also, even though inflation is still off the Fed’s 2% target, wage growth was expected to boost confidence that it is on its way there.
Other secondary labor-market indicators had pointed to strong gains in August, including initial jobless claims, and the employment components of ISM manufacturing indexes.
And it turns out, history repeated itself. Deutsche Bank’s Joe Lavorgna had noted that job gains in August had missed consensus forecasts in 21 out of the past 27 years. He had forecast a payroll print of 170,000, below consensus and closer to the actual print.
By industry, employment in mining and manufacturing declined, while education and health services added the most jobs for any industry, at 62,000.
Stocks fell after the jobs report, and Dow futures lost more than 200 points.
Here’s what Wall Street was expecting, via Bloomberg:
- Nonfarm payrolls: +217,000
- Unemployment rate: 5.2%
- Average hourly earnings, month-over-month: +0.2%
- Average hourly earnings, year-over-year: +2.1%
- Average weekly hours worked: 34.5