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Weak US job growth in August - but is it a blip?

Weak US job growth in August - but is it a blip?
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There was a surprise, sharp slowdown in job growth in the US in August.

The number of people in work increased by 142,000 – the smallest rise in eight months and well short of the 225,000 gain predicted by economists.

Also more Americans gave up looking for work which meant the unemployment rate fell to 6.1 percent of the workforce from the previous month’s 6.2 percent.

In addition there were revisions to the numbers for July and June showing 28,000 fewer jobs created than previously reported.

But the story beyond the headline may be a bit different.

For example, first-time applications for unemployment benefits have fallen to near pre-recession levels and surveys show Americans’ perceptions of the labour market have brightened significantly.

So economists believe this could be down to seasonal factors, with a future upward revision to the August data likely.

However the employment report does support the Federal Reserve’s caution in waiting longer before raising US interest rates.

Fed Chairman Janet Yellen is concerned about sluggish wage growth, the still-elevated numbers of Americans working part-time even though they want full-time employment, and Americans still suffering from a long spell of joblessness.

The jobs data comes ahead of a Fed policy meeting on September 16-17. The central bank has kept benchmark lending rates near zero since December 2008 and financial markets do not foresee an increase until around the middle of next year.

with Reuters