Payrolls in US rise 156 000 wages also below forecasts | Fin24
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Payrolls in US rise 156 000 wages also below forecasts

Sep 01 2017 15:35
Patricia Laya, Bloomberg

Washington - The US economy added fewer employees than expected in August, the jobless rate rose and wages climbed less than forecast, in a break from otherwise solid progress in the labour market.

Highlights of employment (August)

• Nonfarm payrolls rose 156k (est. 180k); June-July revisions subtracted 41k jobs.

• Unemployment  rate, derived from separate survey of households, rose to 4.4% (est. 4.3%).

• Average hourly earnings rose 0.1% m/m (est. 0.2% gain); up 2.5% y/y (est. 2.6%).

• Manufacturing was bright spot, adding 36 000 jobs, matching a five-year high

Key takeaways

The report was less positive than others in recent months, with major components either little changed or below estimates. The private service-providing jobs that have driven hiring for most of the year showed a cooling in August, with gains of 95 000 at a five-month low.

By comparison, manufacturing and construction were robust. Wage growth was held back by declines in hourly earnings in mining and manufacturing.

The data mark the seventh straight August that the government’s initial payrolls print has missed the median estimate of economists; the figure has been revised upward in five of the past six years. The trend may be explained in part by a seasonal adjustment process for the new school year.

The report may represent the cleanest reading on the labour market for several months, as Hurricane Harvey’s fallout in the Houston region begins to affect the data in coming weeks. While the storm may depress payrolls at first, jobs will probably get a subsequent boost as construction and utility workers help rebuild housing and infrastructure.

The Labour Department data are based on surveys that reflect payrolls and Americans’ work status for the week that includes the 12th of the month. Harvey made landfall on August 25.

Economist views

“This was a softer report, but it doesn’t change the overall picture, which is the economy and the labour market are in good shape,” said  Gus Faucher, chief economist at PNC Financial Services in Pittsburgh. “August tends to be a little bit softer, so we can certainly see an upwards revision over the next couple of months,” and wage growth will accelerate as the labour market tightens, he said.

The payrolls figure is a “decent number, in line with a labour market that’s gradually maturing,” said Greg Daco, chief US economist at Oxford Economics, who projected a 160 000 increase. “Demand for labour is still solid. Wage growth remains modest.”

Other details

• Participation rate, or share of working-age people in the labour force, unchanged at 62.9%.

• The U-6, or underemployment rate, was 8.6% for a third month; figure includes part-time workers who’d prefer a full-time position and people who want a job but aren’t actively looking.

• Measure of those working part-time for economic reasons fell by 27 000 to 5.26 million.

• Private employment increased by 165 000 (forecast was 172 000) after a 202 000 advance; government payrolls fell by 9 000.

• Construction jobs rose by 28 000, the most since February; retail hiring was up 800, the first increase since January; leisure and hospitality was up 4 000 following a 58 000 gain.

• Average workweek for all workers fell to 34.4 hours from 34.5 hours (forecast was 34.5 hours).

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