Surprise fall in US jobs last month as slow summer continues
The US economy is creating fewer jobs than expected with the employment market performing weaker during the summer than previously thought, official figures show. There
The US economy is creating fewer jobs than expected with the employment market performing weaker during the summer than previously thought, official figures show. There was a surprise shedding of 23,000 jobs last month, with declines driven by cuts in local government education and retail roles, despite analysts predicting growth. The Bureau of Labor Statistics also revised down the number of jobs added in May and June by 103,000, signalling a slow summer of job creation. The latest figures reduce pressure on the US central bank, the Federal Reserve, to raise interest rates next month, despite high inflation. Analysts had expected an uptick in the number of jobs being added to the economy last month of 80,000, as opposed to a loss of 23,000. As well as falls in local government education the were also declines in retail roles, including in wholesale stores, hypermarkets, gas stations and general mechanise shops.
Despite fewer jobs being created, the Bureau of Labor Statistics said the unemployment rate actually dipped to 4.1% from 4.2%, as the number of people in work or looking for work declined slightly. Average hourly earnings rose by 3.2% in the year to July, compared with the 3.5% economists expected, with average hourly earnings for all employees on private non-farm payrolls at $37.62. Payrolls do have a tendency to be softer in July, but chief investment officer of Premier Miton Neil Birrell said the US jobs market was weaker "by some distance". "Labour force participation is back at levels not seen since the days of Covid, meaning jobs just aren't being created," he said. "This does leave the Fed with the problem of a weak jobs market providing a read across to growth, all at a time when inflation is a problem, but this data will ease the pressure to hike rates.
It's a big call in September." As well as keeping inflation stable, the Fed has a mandate to maintain a high level of employment, meaning the jobs figures are also watched closely when deciding interest rates. US stock markets opened higher on Friday following the release of the latest jobs figures on the prospect that the weaker data might prevent any rate hikes. Kevin Warsh, the newly-appointed chair of the Federal Reserve, has offered little forward guidance on future path of interest rates, in a policy shift from the US central bank. Rates were left unchanged, as broadly expected, between 3.5% and 3.75% last month. However, consumer prices remain elevated, with inflation running at an annual rate of 3.5%. Interest rate hikes are a tool used by central banks aiming to slow the pace at which prices are rising in the shops.
The BriefWire