U.S. non-farm payrolls rise above expectations in August, Fed likely to hike rates in September

Non-farm payrolls in the U.S. rose slightly above market expectations in August. Payrolls rose 201k in the month, whereas the data for previous two months were downwardly revised by 50k, but the hiring trend over the past six months is still healthy at 192k.

The jobless rate continued to be at 3.9 percent. While the headline unemployment has been stable, a wider measure of unemployment, the U-6, which includes marginally attached workers and people who work part-time for economic reasons, continued to fall. It dropped to 7.4 percent in August, a marked rebound from 8.6 percent one year ago.

Services sector hiring added 178k new positions. Strength continued in business services, and health care and social assistance. Wholesale trade and transportation and warehousing rounded out the leading services sectors. Goods sector hiring decelerated a bit to +26k new jobs. Gains were led by construction where hiring is up a strong 4 percent year-on-year. Manufacturing employment was essentially unchanged in August, and is up 2 percent on the year.

Average hourly earnings rose 0.4 percent in August, coming in above expectations. Wages growth accelerated to 2.9 percent year-on-year.

The U.S. economy is growing at high momentum and the Fed is likely to hike rates by 0.25 bps this month, noted TD Economics in a research report.

“Looking ahead, we will be watching to see if hotter wages in August was a one-month blip, or the start of a long-awaited pick up in wage growth that could raise inflation pressures higher than we currently expect”, added TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 40.0685. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex