U.S. job growth slowed in August as employers added 156,000 nonfarm jobs, but 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. 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 earnings rose three cents or 0.1 percent after advancing 0.3 percent in July, keeping the year-on-year gain in wages at 2.5 percent for a fifth consecutive month. Pay raises typically average 3.5 percent to 4 percent when the unemployment rate is this low.
The job market has remained healthy even though the economy has grown at a subpar annual pace of 2.1 percent during the first six months of 2017.
The pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio. Anemic wage gain could, however, make the U.S. central bank cautious about raising interest rates gain this year.
Friday's jobs report comes as Americans have grown more optimistic about the economy. A measure of consumer confidence in August hit its highest level in 16 years, the Conference Board said this week.
Inflation is low. Consumer spending in July rose at its fastest pace in three months. The stock market is up 10 percent so far this year. One measure of factory orders suggests that business investment is increasing.
Even the traumatic damage caused by Harvey around the Houston region is unlikely to break the national economy's stride. Gasoline prices are rising as the flooding from Harvey knocked out refineries and ports, but any possible fallout will likely surface in economic reports over the next two months.
Still, in some respects, the U.S. economy appears less than vigorous. Auto sales have slipped. Fewer homes are being listed for sale. And the tax relief promised by President Donald Trump to boost growth faces an unclear path through a Congress that has failed to pass major legislation.
Overall, hiring this year has averaged 176,000 a month, roughly in line with 2016's average of 187,000. It was the 83rd straight month of job gains.
The August jobs report showed that roughly the same proportion of people last month as in July either had a job or were looking for one. Anyone not actively looking for a job isn't considered part of the labor force and isn't counted as unemployed. This so-called labor force participation rate held at 62.9 percent. The participation rate has tumbled from 66 percent over the past decade, but some of that decline reflects an aging U.S. population that is retiring and lowers the participation rate.
Some economists say a stable participation rate is a positive sign for the economy in recent years, since retirements mean it should in theory be falling slightly.
The economy expanded at a healthy 3 percent annual pace in the April-June quarter, a substantial increase from a weak 1.2 percent in the first three months of the year. This puts economic growth slightly above 2 percent in the first half of the year, roughly the same middling pace of growth the U.S. has experienced since the downturn.
August's moderation in employment growth, which pushed payroll gains below the 176,000 monthly average for this year likely reflects a seasonal quirk as well as a dearth of qualified workers. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.
The department said Hurricane Harvey, which devastated parts of Texas, has no "discernable" effect on payrolls as the disaster struck after the survey period for the August employment report. Economists said the storm could hurt September payrolls if the disruption from the flooding lingers.
The unemployment rate ticked up one-tenth of a percentage point to 4.4 percent. Economists polled by Reuters had forecast payrolls increasing by 180,000 jobs last month. August's gains were far more than the 75,000 to 100,000 jobs per month needed to keep up with growth in the working-age population.
Underscoring labor market strength, manufacturing payrolls surged by 36,000 jobs. Construction employment jumped by 28,000 jobs last month.
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