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US economy adds 173,000 jobs in August | US economy adds 173,000 jobs in August |
(35 minutes later) | |
The US added 173,000 jobs in August, the Department of Labor said on Friday, in the last unemployment report before September's interest rate decision by the Federal Reserve. | The US added 173,000 jobs in August, the Department of Labor said on Friday, in the last unemployment report before September's interest rate decision by the Federal Reserve. |
That was below the 217,000 predicted by analysts, although the Labor Department said that figures for August tend to be revised higher subsequently. | That was below the 217,000 predicted by analysts, although the Labor Department said that figures for August tend to be revised higher subsequently. |
The unemployment rate fell to 5.1% - down from the July figure of 5.3%. | The unemployment rate fell to 5.1% - down from the July figure of 5.3%. |
The rate is the lowest since April 2008. | The rate is the lowest since April 2008. |
Wall Street headed lower following the numbers, with the S&P 500 falling 1.3% and the Dow Jones industrial average shedding more than 200 points or 1.2%. | |
European stock markets, which had been trading lower before the data was released, extended their losses, with the FTSE 100 in London down 2% and indexes in Paris and Frankfurt dropping about 2.6%. | |
Focus on the Fed | |
There were upward revisions to the number of jobs created in the previous two months, which added another 44,000 jobs. The revised figure for July was 245,000 jobs. | There were upward revisions to the number of jobs created in the previous two months, which added another 44,000 jobs. The revised figure for July was 245,000 jobs. |
The weaker-than-expected August number could make Fed officials think twice about increasing rates when they meet on 16-17 September. | The weaker-than-expected August number could make Fed officials think twice about increasing rates when they meet on 16-17 September. |
Chris Williamson, chief economist at Markit, said the decline in the unemployment rate could be the clincher for a September rise. | |
However, he added: "The most likely scenario is one where the Fed waits a little longer in the light of recent economic and financial market instability, instead merely testing financial market reactions with rhetoric that a rate rise is increasingly imminent." | |
Andrew Walker, economics correspondent | |
For financial markets the big question about the jobs report is how it will affect the Fed's decision on whether to raise interest rates later this month. | |
The low headline unemployment rate and the rise in earnings help keep the possibility alive. | |
But the number of new jobs was below expectations and a wider measure of "labour underutilisation" - which includes people not looking for work and part-timers who want longer hours - is relatively high. | |
Then there is all the recent global financial market volatility. A rate rise this month is far from certain. | |
One of the officials who will help make that decision said on Friday that the US labour market had recovered sufficiently to warrant raising rates soon. | |
Richmond Fed President Jeffrey Lacker, who had called for a rate increase in June, said the US economy no longer needed rates to be so low. | Richmond Fed President Jeffrey Lacker, who had called for a rate increase in June, said the US economy no longer needed rates to be so low. |
Fed officials will also take into consideration volatile global financial markets and slowing growth in China. | Fed officials will also take into consideration volatile global financial markets and slowing growth in China. |