Hiring slowed last month, while stubbornly muted wage growth suggests the economy isn' t firing on all cylinders
Job growth slowed in August as U. S. employers added 156,000 nonfarm jobs, below a consensus forecast of 180,000. Yet even that decreased pace suggests that businesses remain confident in an economy now in its ninth year of recovery from the Great Recession.
The Labor Department says the unemployment rate ticked up to 4.4 percent, from 4.3 percent in July. Job gains in June and July were revised downward by 41,000 jobs. The economy has averaged monthly job gains of 176,000 so far this year.
Average hourly pay has just increased 2.5 percent over the 12 months ending in August. Pay raises typically average 3.5 percent to 4 percent when the unemployment rate is this low, but the rate of wage increases has remained stubbornly low.
Modest wage growth suggests employers do not yet feel pressure to significantly boost pay to attract and retain workers, some economists think.
Overall, the job market has remained healthy even though the economy grew at a subpar annual pace of 2.1 percent during the first six months of 2017.
The fastest-growing sector was professional and business services, which tend to be higher paying, adding 40,000 jobs in August. Manufacturing and construction payrolls grew by 36,000 and 28,000, respectively, while health and education services companies added a lower-than-average 25,000 jobs. Leisure and hospitality firms added only 4,000 jobs.
Tepid wage growth and soft inflation readings could deter the Federal Reserve from continuing to hike interest rates at its policy meeting later this month.
“When the Federal Reserve meets in September, they should take a hard look at the data, which right now shows it’s too soon to raise interest rates, ” said Elise Gould, a senior economist at the Economic Policy Institute.
