Jobless rate ticks up as economy adds tepid 156,000 jobs during August

Hiring slowed in August as employers added just 156,000 jobs, but many economists expected a pullback because of a history of late-summer measurement problems, and the Federal Reserve is likely to shrug off the blip as it moves to wind down its stimulus.

The unemployment rate, which is calculated from a different survey, rose to 4.4 percent from 4.3 percent, the Labor Department said Friday.

Also discouraging: Job gains for June and July were revised down by 41,000. June’s was downgraded to 210,000 from 231,000 and July’s to 189,000 from 209,000.

Average hourly wages rose 3 cents to $26.39, keeping annual gains at 2.5 percent. While pay increases have picked up moderately from the 2 percent pace that prevailed for most of the recovery, they’ve slowed from gains of nearly 3 percent early in the year. Economists have expected low unemployment to spur faster pay hikes.

The Fed tentatively plans to raise interest rates for third time in 2017 near the year’s end, but with wage growth sluggish, the chances of that “continue to diminish,” said Carl Tannenbaum, chief economist of Northern Trust and a former Fed staffer.

But Jim O’Sullivan, chief U.S. economist of High Frequency Economics, said he still expects a December rate hike as long as inflation picks up.

Businesses added 165,000 jobs last month. Federal, state and local governments lost 9,000.

Economists expected 180,000 payroll gains, according to a Bloomberg survey. Hurricane Harvey in the Houston area did not affect August job totals because Labor’s survey is conducted in the week that includes the 12th of each month. The storm hit the region Aug. 25. September employment, however, is expected to be affected, with employment growth possibly reduced by tens of thousands of jobs, O’Sullivan said. Economists expect that to be offset with strong gains in subsequent months. Still, it will be tough to get an accurate read of the labor market over the next couple of months.

“It may not be until October and November when we are able to get a clear picture on recent hiring momentum,” said Michael Gapen, chief U.S. economist of Barclays.

After two months of strong employment increases, many economists anticipated a retreat in August based on a pattern of weak initial estimates in late summer. Over the past five years, first estimates of job growth in August have averaged 146,000, but those were subsequently revised up to an average 192,000, according to an analysis by High Frequency Economics. Volatile hiring at the start of the school year could make it more difficult to make seasonal adjustments to the data, some economists say.

As a result, the Fed was expected to dismiss a weak showing Friday and stay on track to announce the launch of a reduction in its $4.5 trillion asset portfolio at a mid-September meeting. The Fed bought more than $3 trillion in Treasury bonds and mortgage-backed securities during and after the financial crisis to push down long-term interest rates, and the shedding of those assets should nudge those rates higher.

Meanwhile, the Amazon jobs fair Aug. 2 was expected to boost payroll growth after the company said it hoped to hire 50,000 workers in a day, said economist Diane Swonk of DS Economics. She was looking for a more modest lift of as much as 20,000 to warehouse and manufacturing employment. Manufacturing added 36,000 jobs last month, but transportation and warehousing added just 2,000.

Professional and business services led the August job gains, with 40,000. Construction added 28,000.