US unemployment falls to 5.1 percent — lowest since April 2008
The US unemployment rate fell to 5.1 percent, the lowest since early 2008, after the economy pumped out a modest 173,000 new jobs last month, the Labor Department said Friday.
Although the jobs number was well below what was forecast, the data — coupled with upward revisions to the two previous months — showed an economy continuing to expand healthily despite the global slowdown.
But given the worries that China’s problems will slow global growth, economists said that the data, while strong, will not be enough to push the Federal Reserve to begin raising interest rates when it meets later this month.
Analysts had expected on average that 217,000 new jobs would have been added in August, and some voiced disappointment in the actual number.
But they noted that jobs growth in the world’s largest economy has now averaged 221,000 for the past three months, and that August figures are often distorted by seasonal shifts and almost always revised sharply upwards.
“The weakness in August employment should not be over-interpreted,” said Nariman Behravesh, chief economist at economic consultancy IHS .
“The August data on jobs are often distorted by seasonal factors, e.g. a surge in teachers being hired at the start of the school year.”
The jobless rate hit the lowest level since April 2008, when the country was plunging into recession.
The sharp one-month fall from 5.3 percent in July was helped by the Labor Department revising the job creation numbers for June and July up by a total of 44,000 positions.
But the data also included a rise of 261,000 in the number of people who have dropped out of the labor force completely.
Wage gains — an important indicator for inflation — remained muted, rising eight cents an hour to $25.09 from July, up 2.2 percent from a year ago.
Underpinning that relative weakness was a 158,000 surge, to 6.48 million, in the number of people working part-time because they cannot find full-time positions.
Government hiring picked up in the month, to 33,000 new positions, but the strongest gains remained in the healthcare sector, with 56,400 jobs. The mining and manufacturing sectors both saw declines.
Despite the fall in the unemployment rate, the overall workforce participation rate remained low at 62.6 percent, suggesting that the jobs market and wages are still not strong enough to pull dropouts back to the workforce. In April 2008, the rate was 65.9 percent.
Analysts downplayed those negatives.
Ian Shepherdson of Pantheon Macroeconomics said that for the past six years, the August figure has been revised upward by an average of 66,000 each time.
Nevertheless, he and others said the report was likely not strong enough to convince the Federal Reserve to begin raising interest rates at its September 16-17 policy meeting, given the external environment.
“Dig deeper and the labor market report should in fact add to rate-rise odds, but recent financial market volatility and growth jitters in China mean it would be seen by many to be a risky move to start hiking rates any time soon,” said Chris Williamson at Markit .