U.S. nonfarm payrolls gains rise below expectations in August, jobless rate rises marginally

U.S. payrolls rise was below expectations in August. Non-farm payrolls rose 156,000 in August, as compared with consensus expectations of 180,000. Payroll data for the months of June and July were downwardly revised to 210k and 189k, respectively. Therefore, the three-month average of job growth decelerated to 185k from 195k.

Private payrolls were up 165k, shy of 8k from consensus expectations. Private services hiring was again led by business services, health care & education, other services and finance. Goods hiring was strong, with manufacturing, construction and mining and logging all adding jobs. Government hiring was subdued as all branches of government shed jobs, noted TD Economics in a research report.

The jobless rate rose marginally by 0.1 percentage points to 4.4 percent as the labor force rose by 77k while the ranks of the unemployed increased by double that. The participation rate was greatly unchanged at 62.9. In spite of the rise in the headline jobless rate, wider measures of labor underutilization remained the same.

Average hourly earnings increased just 0.1 percent in the month. This is just half the pace that was expected, with downward revision to the past month. Therefore, the year-on-year wage metric remained stable at 2.5 percent in August. Average weekly hours dropped 0.1 to 34.4.

Today’s headline print dismayed expectations, in contrast to the solid ADP print mid-week. Along with the large downward revisions to earlier months’, trend payroll growth decelerated from 195k prior to the report to just 185k given the new data.

Nevertheless, the report was not totally gloomy. The rate of job creation continued to be well above the slack absorbing rate of about 100k per month. Furthermore, most of the sectors that added jobs were the well-paying ones. Significantly, the goods producing sectors grew on the month.

Today’s report was not effected by Hurricane Harvey; however, there might be an impact in the following months’ reports if the disruptions extend to mid-month, stated TD Economics. The wage data was perhaps the most disappointing element of the report, with the headline coming below expectations and huge downward revisions to earlier months.

“Ultimately, we don’t expect the data to dissuade the Fed from beginning sheet normalization in the coming weeks, but any hikes are unlikely to take place until inflation and wages firm up”, added TD Economics.

The U.S. Fed is expected to hike the rates during its meeting in December, once the data flow becomes constructive.

At 15:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -9.26219. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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