Job cre­ation points to steady growth in US

The Myanmar Times - - International Business -

THE US labour mar­ket slowed pre­cip­i­tously in Au­gust but con­tin­ued a sixyear streak of monthly job cre­ation, ac­cord­ing to fig­ures re­leased last week by the Labour De­part­ment.

The econ­omy added 151,000 new po­si­tions for the month, a sharp drop from July’s re­vised to­tal of 275,000 new non-farm po­si­tions and also well below an­a­lyst ex­pec­ta­tions.

Lead­ing up to the Septem­ber 2 dis­clo­sure, mar­kets had been in­tently await­ing the new num­bers as a sig­nal of loom­ing in­ter­est rate hikes by the Fed­eral Re­serve.

How­ever, it was not im­me­di­ately clear how Au­gust’s em­ploy­ment re­sults were likely to in­flu­ence the Fed’s think­ing.

An­a­lysts dis­agreed as to whether the jobs num­bers pre­saged a rate hike as soon as this month.

As Au­gust’s added jobs were eas­ily ab­sorbed by the growth in the size of the labour force, the re­sults ap­peared to tread water.

The un­em­ploy­ment rate re­mained steady at 4.9 per­cent for the third month in a row. The num­ber of longterm un­em­ployed was also un­changed at 2 mil­lion peo­ple.

Na­ri­man Behravesh, chief econ­o­mist at IHS Markit, said the fig­ures im­plied that un­em­ploy­ment was likely to re­main at that level in the near-term, point­ing to a “a steady, if un­ex­cit­ing, cruise speed” for eco­nomic growth of 2 - 2.5pc.

The In­ter­na­tional Mon­e­tary Fund has said it ex­pected to down­grade its US eco­nomic fore­cast for 2016 next month.

As for the Fed’s ac­tions when it re­views mon­e­tary pol­icy in this third week of Septem­ber, the out­come ap­peared to be a toss up.

“Most mem­bers will view this re­port as con­sis­tent with solid eco­nomic ac­tiv­ity and will be­lieve that ac­tiv­ity will con­tinue to pull in­fla­tion up­ward to­ward their tar­get,” Rob Martin and Michael Gapen of Bar­clays said in a re­search note, which pre­dicted a Septem­ber rate in­crease.

Joel Naroff of Naroff Eco­nomic Ad­vi­sors dis­agreed: “If Janet Yellen and her merry band of ter­ri­fied rate hik­ers wanted a strong jobs re­port to give them cover to raise rates in Septem­ber, they didn’t get it,” he wrote in a note to clients.

The min­ing sec­tor, dom­i­nated by the oil in­dus­try, con­tin­ued to shed jobs since reach­ing a peak in 2014, los­ing 4000 more po­si­tions in the month.

Em­ploy­ment lev­els in in­dus­tries such as con­struc­tion, man­u­fac­tur­ing, retail and trans­porta­tion were flat.

How­ever, other sec­tors con­tin­ued to trend higher, with gains in health care, which added 14,000 more jobs, food and ser­vices, which added 34,000 po­si­tions, and the fi­nan­cial sec­tor, which rose by 15,000, the La­bor De­part­ment said.

Av­er­age hourly earn­ings rose a mea­ger 3 cents to US$25.73, putting them up 2.4pc for the year.

The Univer­sity of Michi­gan econ­o­mist Justin Wolfers said the fig­ures showed the US econ­omy con­tin­ued on a healthy up­ward path but that there were scant signs of in­fla­tion­ary pres­sures.

“It’s now a sure thing that the econ­omy will be mov­ing for­ward – look­ing healthy and show­ing at least some mo­men­tum – come Elec­tion Day,” he said. –

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