U.S. job growth slows in August

WASHINGTON • U.S. job growth slowed in August as employers added 156,000 jobs, though still enough to suggest 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 per cent to a still-low 4.4 per cent, the labour 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 solid 176,000.

Friday’s jobs report pointed to an economy 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 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 per cent over the 12 months that ended in August. Wage growth typically averages 3.5 per cent to four per cent annually when unemployment is this low.

The economy has grown at a subpar annual pace of 2.1 per cent 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 per cent so far this year. One measure of factory orders suggests that business investment is increasing.

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 job growth in the coming months “will weaken substantially” in the wake of Harvey, only to rebound as workers who were temporarily laid off are rehired.

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 secondguessing December,” said John Silvia, chief economist at Wells Fargo.