WASHINGTON – U.S. employers added the fewest jobs in eight months in August, snapping a streak of robust gains and surprising analysts because recent reports had suggested that the economy was steadily improving.
The economy generated just 142,000 jobs August, the Labor Department said Friday, well below the average of 212,000 over the previous 12 months. The unemployment rate fell to 6.1 per cent from 6.2 per cent, but only because more people without jobs stopped looking for one and were no longer counted as unemployed.
Employers also added 28,000 fewer jobs in June and July than the government had previously estimated.
The slowdown was unexpected after most recent economic data had indicated that the economy was growing at a healthier pace. Some analysts noted that other measures of the job market remain solid and that August’s figures could mark just a temporary slowdown.
The figures “will inevitably spark speculation that the US recovery is somehow coming off the rails again,” said Paul Ashworth, an economist at Capital Economics. “However, we’re not too concerned by what is probably just an isolated blip.”
The weaker-than-expected figures make it unlikely that the Federal Reserve will speed up its timetable for raising interest rates. Most analysts expect the first rate hike around mid-2015.
The Dow Jones industrial average fell in the morning, but stocks returned to positive territory by mid-day. The yield on the 10-year Treasury note dropped to 2.42 per cent from 2.45 per cent late Thursday. That suggested that some investors sought the safety of bonds and foresee no Fed rate increase anytime soon.
August’s job growth was well below the average monthly increase of 212,000 over the past 12 months. Job gains have averaged 207,000 a month in the past three months, still a healthy pace.
Patrick O’Keefe, director of economic research at the accounting and consulting firm CohnReznick, said he found Friday’s report puzzling. O’Keefe noted that the tepid job growth was inconsistent with surveys showing businesses and consumers gaining confidence.
He also said August’s job figures tend to be unusually volatile and are typically revised later as government statisticians adjust for unusual seasonal factors such as the reopening of school and the Labor Day holiday.
The biggest drops in hiring last month occurred in retail, which shed 8,400 jobs, after gaining 21,000 in July, and in manufacturing, where employment was flat, down from a gain of 28,000 in July. Transportation and warehousing added only 1,200 jobs, after adding 19,100 in July.
There were some brighter spots in the report. Higher-paying fields, including accounting, engineering and management, reported solid job gains. And the number of people working part time who would prefer full-time work fell.
Recent reports of strength in manufacturing and construction, in particular, had raised hopes that hiring in August would be solid.
Factories expanded last month at the best rate in more than three years. Factory output is being driven in part by auto sales. Americans bought more cars last month than in any other August in 11 years. And builders increased spending on construction in July by the most in more than two years.
In addition, fewer Americans are seeking unemployment benefits, which means that companies are laying off few workers.
Still, wage gains have been sluggish since the Great Recession ended in 2009, and consumers have remained cautious. Consumer spending dipped in July, the first decline since January.
In August, average hourly pay rose six cents to $24.53, 2.1 per cent higher than a year ago and barely ahead of the overall 2 per cent inflation rate.
U.S. exports rose in July, narrowing the trade deficit. A smaller trade deficit can boost growth because it indicates that more of the goods and services that consumers and businesses buy were made in the United States.
Those reports suggested that the economy could grow at about a 3 per cent annual pace in the second half of this year. That would mark a sharp improvement from the 1.1 per cent annual rate in the first half.
But the slowdown in August hiring also signals that Americans might need to spend more to boost growth and ensure that hiring remains healthy in the months ahead.
AP Economics Writers Paul Wiseman and Josh Boak contributed to this report.
Contact Chris Rugaber on Twitter at http://Twitter.com/ChrisRugaber .