US adds 130,000 jobs August, dropping below expectations
Hiring slowed in the US in August as employers added a lackluster 130,00 new jobs, strengthening arguments that Donald Trump’s trade wars are beginning to hit the US economy.
Economists had expected the US to add about 160,000 new jobs over the month. While the labor department announced the unemployment rate remained at 3.7%, a near 50-year low, the pace of hiring slowed markedly, down from an average of 192,000 new jobs a month last year to 143,000 so far this year.
The figures were particularly worrying for the president. Mining, an industry where Trump has promised to bring back jobs, lost 5,000 positions over the month. Manufacturing added just 3,000 jobs and June and July’s figures were revised down. Factory production has declined for two consecutive quarters, according to the Federal Reserve, and is already technically in recession.
Trump dismissed suggestions the report was anything less than stellar.
August’s figures were also boosted by the US government hiring 25,000 temporary workers to conduct its 2020 national census. And the report cut its assessments for job gains for June and July by a total of 20,000.
After the news broke Trump resumed his attack on the Federal Reserve chair, Jerome Powell. “Where did I find this guy Jerome? Oh well, you can’t win them all!” he wrote on Twitter.
Trump has consistently blamed the Fed for slowing economic growth by refusing to quickly cut interest rates despite the fact that they remain historically low and have throughout the economic recovery.
The US jobs report comes as fears of a global recession are escalating. The European Central Bank has signaled it is planning to cut interest rates and announce a new stimulus package. The moves come as the latest industrial production figures from Germany give “a convincing signal that Germany is in recession”, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said on Friday.
“The 130,000 gain in non-farm payroll employment in August was flattered by the hiring of 25,000 temporary workers to help prepare for next year’s census. More generally, there has been a clear slowdown in trend employment growth, particularly in the private sector, with the six-month average monthly gain below 150,000,” said Paul Ashworth, chief US economist at Capital Economics.
He said revisions that will be incorporated into the data early next year will probably knock another 500,000 jobs off the overall gains in employment over the year, meaning the current average monthly jobs gain will be closer to 110,000. But Ashworth said besides the headline numbers the report was “quite positive” and pointed to stronger wage growth.
The US has now added jobs for a record 95 months in a row. Wage growth, which has lagged behind the recovery in the jobs market, has also started to pick up and rose at an annual rate of 3.2% in August.
The report will do little, however, to assuage fears that the long-running trade dispute between the US and China will hit the global economy. Last month Trump ordered US firms to “immediately start looking for an alternative to China, including bringing your companies HOME” as he announced a new round of tariffs.
China and the US will meet to discuss trade tensions next month and Chinese officials have recently signaled that they would like to repair relations between the world’s two largest economies.