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

There was a surprise, sharp slowdown in job growth in the US in August. <br /><br />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. <br /><br />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.<br /><br />In addition there were revisions to the numbers for July and June showing 28,000 fewer jobs created than previously reported. <br /><br />But the story beyond the headline may be a bit different. <br /><br />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. <br /><br />So economists believe this could be down to seasonal factors, with a future upward revision to the August data likely.<br /><br />However the employment report does support the Federal Reserve’s caution in waiting longer before raising US interest rates.<br /><br />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.<br /><br />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.<br /><br />with Reuters