WASHINGTON: US job growth slowed more than expected in August, with retail hiring declining for a seventh straight month, but strong wage gains should support consumer spending and keep the economy expanding moderately amid rising threats from trade tensions.
The Labour Department’s closely watched monthly employment report on Friday also showed a rebound in the workweek after it shrunk to its shortest in nearly two years in July, suggesting that companies were not yet laying off workers.
Economists said the report was consistent with an economy that was slowing, but probably not flirting with a recession as has been signalled by financial markets, especially an inversion of the US Treasury yield curve. The economy’s waning fortunes have been blamed on the Trump administration’s year-long trade war with China, which has eroded business sentiment and plunged US and global manufacturing into recession.
“The softening in job growth should surprise no one but it doesn’t mean the economy is headed toward a recession right away,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Households still have the income to keep spending’’.
Nonfarm payrolls increased by 130,000 jobs last month, flattered by temporary hiring of 25,000 workers for the 2020 census. The economy created 20,000 fewer jobs in June and July than previously reported. Economists polled by Reuters had forecast payrolls rising by 158,000 jobs in August.
President Donald Trump shrugged off the slowdown in job growth, tweeting “Good Jobs Numbers,” and claiming that “China is eating the Tariffs’’.
US House of Representatives Speaker Nancy Pelosi, a Democrat, said the employment report offered “little comfort in an economy faltering under the Trump administration’s reckless agenda to undermine the health, financial security and well-being of the American people’’.
Federal Reserve Chair Jerome Powell said in Zurich, Switzerland, on Friday he was not forecasting or expecting a recession, but reiterated the US central bank would continue to act “as appropriate” to keep the longest expansion in history on track. The Fed is expected to cut interest rates again this month after lowering borrowing costs in July for the first time since 2008.
A seasonal quirk could account for last month’s less-than-expected increase in employment. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.
But slower job growth is also in line with sharp declines in both the Institute for Supply Management’s manufacturing and services industries employment measures in August.
Job gains have averaged 156,000 over the last three months, still above the roughly 100,000 per month needed to keep up with growth in the working age population. The unemployment rate was unchanged at 3.7 per cent for a third straight month in August as 571,000 people, the most in 10 months, entered the labour force.
Job growth slowed since mid-2018. Economists say it is unclear whether the loss of momentum in hiring was due to ebbing demand for labour or a shortage of qualified workers. — Reuters