U.S. Adds a Disappointing 130000 Jobs in August

U.S. services sector suggests economy weathering trade storm

Yesterday morning, Donald Trump published a curious tweet, declaring, "Really Good Jobs Numbers!"

Department officials said the unemployment rate was 3.7 percent, unchanged from the previous month.

Economists forecast the Labour Department report will show the U.S. added 160,000 nonfarm payrolls last month.

But first-time applications for unemployment benefits, a more timely indicator of labor market health, have been hovering near historically low levels.

Average hourly earnings for all private sector workers in August increased by $0.11, which was an increase from the $0.9 hikes in the two month prior.

Industries with the greatest gains included healthcare and financial services, which added 24,000 and 15,000 jobs respectively, the BLS reported.

In addition, the pace of job creation this year has slowed, with the economy adding an average of 165,000 jobs each month, down from 223,000 last year.

But slower job growth is also in line with sharp declines in both the Institute for Supply Management's manufacturing and services industries employment measures in August. In addition, retaliatory tariffs from China have cut into USA exports.

Some American firms are cutting back on capital investment due to concerns over an economic slowdown amid the U.S. trade war with China.

This is a developing story. The anticipated job gains would be below the monthly average of 165,000 over the last seven months, but still above the roughly 100,000 per month needed to keep up with growth in the working age population. But the annual increase in wages is seen dipping to 3.1% from 3.2% in July as last year's surge falls out of the calculation. That is easily ahead of inflation and increases Americans' spending power.

Retail jobs dropped for the seventh straight month in a row, indicating that USA retailers could be more troubled that expected.

Job growth has been slowing since mid-2018. 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. 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.

But a broader measure of unemployment, which includes people who want to work but have given up searching and those working part-time because they can not find full-time employment, rose to 7.2% from a more than 18-year low of 7.0% in July.

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 payrolls rising by 158,000 jobs in August. "I know we just passed Labor Day but they just continue to shed jobs like nobody's business", said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

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.

Construction payrolls increased by 14,000 jobs after slipping by 2,000 in July. While employment is slowing and the headline number came in softer than expected, the 3-month trend of 150,000 jobs is the figure that will keep unemployment steady. The Labor Department said an index of hours worked across the economy rose 0.4% in August.

But Democratic operatives, eager to show that President Trump is not the "jobs, jobs, jobs" leader he says he is, jumped on the news.

The modest result in August was attributed mainly to declines in retail and transportation employment.

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