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Mixed Aug jobs report clouds Fed rate hike prospects

By Religare
|

American employers added fewer than expected jobs in August, but the US jobless rate slipped to the lowest level since April 2008, offering little clarity over the prospects of a Federal Reserve interest rate tightening at its upcoming two-day monetary policy meet on September 15-16.

Non-farm payrolls climbed by 173,000 in August, compared to an upwardly revised 245,000 gain in July, and below expectations of a 217,000 rise.

Upward revisions to July and June data showed a 44,000 jobs addition to total payrolls, the Labour Department reported on Friday.

 

The unemployment rate fell to 5.1 per cent in August 2015 from 5.3 per cent in July 2015, while the average work-week for all employees climbed to 34.6 hours, the longest in six months, from 34.5 hours in July.

Further, average hourly earnings climbed 0.3 per cent in August from July, when they rose 0.2 per cent.

A slowdown in the pace of hiring will be a cause of concern for Fed policymakers as they debate when to raise interest rates in the US for the first time since 2006.

While domestic demand remains strong in the US, a gloomy global outlook amid the ongoing rout in financial markets, China slowdown, coupled with a strengthening dollar & an oil price collapse may be weighing on the US job market, triggering a slowdown in the pace of hiring.

A pickup in jobs and incomes is necessary to boost the pace of consumer spending that accounts for about 70 per cent of US GDP.

Story first published: Monday, September 7, 2015, 9:00 [IST]
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