Following two months of strong gains, data from the Bureau of Labor Statistics this morning showed a slightly softer jobs report that fell just shy of economist forecasts, as employment slowed in August.
According to CNBC, Wall Street economists had anticipated a gain of 180,000 jobs for the month and a 0.1 percent drop in the unemployment rate from July. However, according to the BLS, just 151,000 nonfarm payroll positions were added in August, and the unemployment rate remained unchanged at 4.9 percent for the third straight month.
The new data leaves the number of unemployed persons relatively unchanged at 7.8 million, according to the report.
What the numbers mean for interest rates
The recently released report was expected to be a telltale sign of whether or not the next interest rate hike would be considered at the late September meeting of the Federal Reserve. Early speculation by investors had anticipated that a nonfarm payroll increase of between 250,000 and 300,000 for August would be strong enough to prompt a rate hike, reported USA Today. These expectations were backed by comments made by Janet Yellen, Fed Chairwoman, last week. Moreover, the No. 2 official of the Fed, Stanley Fischer, implied that two rate increases may even happen before next year.
However, with a weaker-than-expected August jobs report, economists predict that probability looks dim. However, overall the U.S. economy has added more than 1 million jobs this year and after two years of significant gains, the job market is holding on to that momentum, reported CNN Money.
Gains across the industry
The biggest employment gain for August was in food services and drinking places, which added 34,000 jobs for the month. This kept the industry on track with its upward trend over the month. Since the beginning of the year, the sector has seen 312,000 positions added, according to the report.
Also adding strong gains for the month was the social assistance sector, creating 22,000 positions with 17,000 of them in individual and family services. Employment in professional and technical services increased by 20,000, and financial activities added 15,000 jobs. Employment in construction, government and manufacturing as well as several other industries remained unchanged.
Last month, the average hourly earnings for all employees on private nonfarm payrolls increased to $25.73, an advance of 3 cents.
The central bank will gather on September 20 and 21, and though the recent jobs report represents just one month of the year, it could have a significant impact on the interest rate hike, reported The New York Times. The potential hike is being closely watched by many, since the interest rate has been raised just once by policymakers since the 2008 financial crisis. Until then, the question of an interest rate increase remains.
Labor Market Snapshot
The full Bureau of Labor Statistics report can be found here.