A more mod­est pace for job, pay growth

Au­gust re­port may put in­ter­est rate hike in ques­tion

Baltimore Sun - - MARYLAND - By Don Lee — As­so­ci­ated Press

WASH­ING­TON — Job and pay growth slowed in Au­gust, re­turn­ing to a more mod­est pace that clouds the prospects for an in­ter­est rate hike by the Fed­eral Re­serve later this month.

Em­ploy­ers added 151,000 jobs last month, the gov­ern­ment said Fri­day. That is still a healthy num­ber but lower than the 180,000 that an­a­lysts were ex­pect­ing on av­er­age and down sharply from re­vised gains of 271,000 jobs in June and 275,000 in July.

Job gains in those prior two months came af­ter very slug­gish hir­ing in the spring and were not ex­pected to be sus­tained. Fed and other economists have said about 100,000 to 125,000 new jobs a month are needed to keep pace with the pop­u­la­tion and la­bor force growth and hold the un­em­ploy­ment rate steady.

The na­tion’s job­less rate in Au­gust re­mained at 4.9 per­cent for the third Em­ploy­ment seek­ers wait to ap­ply for work at a Florida job fair in July, when 275,000 po­si­tions were added. Em­ploy­ers added 151,000 last month, the gov­ern­ment said Fri­day. straight month. Fore­cast­ers were look­ing for it to drop to 4.8 per­cent.

Fed Chair Janet Yellen last week seemed to be pre­par­ing mar­kets for the cen­tral bank’s first rate in­crease since De­cem­ber, cit­ing the na­tion’s “con­tin­ued solid per­for­mance” in the la­bor mar­ket. But some an­a­lysts said the La­bor Depart- ment re­port was not strong enough to push Fed pol­i­cy­mak­ers to raise the bench­mark in­ter­est rate at the con­clu­sion of their two-day meet­ing Sept. 21.

“I don’t think it tips the bal­ance to­ward a rate hike,” said Kevin Lo­gan, chief U.S. econ­o­mist at HSBC Bank in New York.

Most ex­perts now don’t see a mod­est Fed rate in­crease un­til af­ter Elec­tion Day Nov. 8, at its De­cem­ber meet­ing at the ear­li­est, but oth­ers said the re­port was not so bad as to cause a re­think by Yellen or the Fed.

The lat­est job growth “is sim­ply not slow enough to de­rail a rate hike,” said Chris Rup­key, chief fi­nan­cial econ­o­mist at MUFG

Mar­kets tick up

NEW YORK — U.S. stocks rose Fri­day as in­vestors found some pos­i­tive as­pects in a mid­dling jobs re­port. Job growth slowed in Au­gust, and in­vestors hope that will con­vince the Fed­eral Re­serve to wait be­fore rais­ing in­ter­est rates.

The Dow Jones in­dus­trial av­er­age climbed 72.66 points, or 0.4 per­cent, to 18,491.96. The Stan­dard & Poor’s 500 in­dex picked up 9.12 points, or 0.4 per­cent, to 2,179.98. The Nas­daq com­pos­ite ad­vanced 22.69 points, or 0.4 per­cent, to 5,249.90. Union Bank in New York.

About 44,000, or 29 per­cent, of the jobs added last month were in re­tail and the ho­tel and restau­rant sec­tors. Most of the new jobs last month were in pro­fes­sional ser­vices and fi­nan­cial busi­nesses and sec­tors such as health and ed­u­ca­tion. Man­u­fac­tur­ing and con­struc­tion in­dus­tries shed jobs, how­ever.

The econ­omy is now in its eighth year of growth since the Great Re­ces­sion, but it has been slow by his­tor­i­cal stan­dards. And one clear dis­ap­point­ment has been on the pay front. Au­gust was an­other let­down.

Av­er­age hourly earn­ings of all pri­vate-sec­tor work­ers rose just 3 cents last month from July, to $25.73. That was up 2.4 per­cent from a year ear­lier but the weak­est show­ing since March and down from an an­nual pace of 2.7 per­cent in July.

Economists have been wait­ing for a big­ger, stur­dier pickup in earn­ings as the job mar­ket has tight­ened, but the smaller-than-ex­pected gains sug­gest there are many more job­less work­ers than the 7.85 mil­lion peo­ple on the of­fi­cial un­em­ploy­ment rolls. A long-run­ning trend of low pro­duc­tiv­ity growth and, more re­cently, weak­en­ing cor­po­rate profits are not help­ing ei­ther.

In­clud­ing the Au­gust numbers, job growth this year has slowed to an av­er­age of 181,500 a month, from 229,000 last year and 251,000 in 2014.

LYNNE SLADKY/AP

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