Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Nonfarm payroll growth for August came in below expectations at 173k. Heading into the report, (forecast: 225k) and the consensus (217k) had been looking for payroll gains in line with recent trends. While total job growth in August was a bit softer than expected, prior months' data were revised higher and other indicators in this morning's report point to further tightening in US labor markets. The U3 unemployment rate fell 0.2pp, to 5.1%, the lowest since 2008. The broader U6 underemployment rate, which includes part-time workers, declined one-tenth, to 10.3%, as the labor force participation rate held steady at 62.6%. Average hourly earnings rose 0.3% m/m, which brought the annual rate of wage growth to 2.2%. On balance, the August employment report is consistent with ongoing improvement in labor market conditions.
"That said, we do not see this morning's employment report as changing the outlook for Fed policy; we maintain our view that the FOMC will refrain from raising rates at its September meeting, as we believe committee members will desire more to time to assess the effect of the recent financial turmoil on the domestic economy. If the Fed does defer the start of the rate hike cycle as we expect, the details of the August employment report mean the Fed will signal it remains on a meeting-to-meeting basis when assessing the proper timing of lift-off. In other words, should recent volatility in financial markets prove short-lived, a hike at the December meeting would be a strong possibility. If it proves longer-lasting, with possible spillover effects in to US activity, labor markets, and inflation, the Fed may very well defer rate hikes beyond year-end",says Barclays.
Payroll growth softens in August, but prior months' data now look stronger. Nonfarm payrolls expanded 173k in August in the establishment survey, a bit below than forecast of 225k and median consensus expectations of 217k. However, job growth was revised up 44k over the previous two months, offsetting much of the weakness at the headline level; the three-month trend in payroll growth stands at a solid 221k as of August. The softness relative to expectations was driven by goods-producing employment, which contracted 24k (previous: +13k). Manufacturing employment declined 17k, and mining was down 9k; these readings are in line with the weaker ISM manufacturing reading for August and the view that domestic manufacturing continues to face headwinds from lower energy prices and a strong dollar. Service sector payrolls grew 164k (previous: 211k), with trade and transportation payroll growth (28k, previous: 55k) showing some softness relative to the recent trend. Temporary help, often an indication of future hiring intentions, grew 11k (previous: -9k). Overall, the softer 140k (previous: 224k) in private payroll growth was boosted by stronger-than-expected gains in government employment. Public sector payrolls grew 33k (previous: 21k), led by gains in state and local payroll growth.
Elsewhere in the establishment survey, average hourly earnings rose 0.3% m/m in August and are now up 2.2% y/y, modestly outperforming the expectation. Average hourly earnings for production and nonsupervisory employees rose 0.3% as well and stand 1.9% above year-ago levels. The payroll proxy (average hourly earnings multiplied by the index of aggregate weekly hours) in July and August is up 5.2%, versus 3.6% in Q2. Average hourly earnings held steady at 34.6, in line with the expectation and outperforming consensus expectations for a one-tenth decline. Hours in July and August are up at a 2.8% annualized rate relative to the 1.0% rise in Q2. The trends in income and hours are consistent with solid consumption spending in the second half of the year.
"Household survey shows labor market tightening. Household employment grew 149k (previous: 148k) in August, and the labor force participation rate held steady at 62.6%. These gains led the unemployment rate to fall two-tenths, to 5.1% (5.112%), more than we had forecast, but in line with our view that the unemployment rate will continue to fall faster than many expect. Broader measures of unemployment were somewhat mixed, but on balance showed further improvement. U6, the underemployment rate, fell one-tenth, to 10.3%. The rise in part-time employment for economic reasons of 158k meant U6 did not fall as much as U3. Nevertheless, the trend decline in U6 continues and signals that labor markets continue to tighten", added Barclays.
