US job growth likely slowed in August, but gains are enough to support the economy
Hiring slowed amid trade war as economists expected to add about 160.000 jobs while unemployment rate remained at 3.7%.
U.S. job growth likely slowed further in August, but the pace of gains probably remains sufficient to keep the economy expanding moderately amid rising threats from trade tensions and weakness overseas that have left financial markets fearing a recession.
The Labor Department’s closely watched monthly employment report on Friday will come in the wake of a survey on Tuesday that showed manufacturing contracting for the first time in three years in August. The economy’s waning fortunes, underscored by an inversion of the U.S. Treasury yield curve, have been largely blamed on the White House’s year-long trade war with China.
The US jobs report comes as fears of a global recession are escalating. The European Central Bank has signaled it is planning to cut interest rates and announce a new stimulus package. The moves come as the latest industrial production figures from Germany seem to be screaming out that Germany is in recession. At least, that’s what Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said on Friday.
The economy is also facing headwinds from Britain’s potentially disorderly exit from the European Union, and softening growth in China and the rest of the world.
The Federal Reserve is expected to cut interest rates again this month to keep the longest economic expansion in history, now in its 11th year, on track. The U.S. central bank lowered borrowing costs in July for the first time since 2008.
“The general message from the labor market is that businesses are cutting back on hiring, but they are not laying off workers and that is important. Consumers are what’s keeping the economy moving at this point.”said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Nonfarm payrolls probably increased by 158,000 jobs last month after advancing 164,000 in July, according to a Reuters survey of economists. Economists surveyed by Dow Jones forecast a slightly lower jobs number at 150,000. The anticipated job gains would be below the monthly average of 165,000 over the last seven months, but still above the roughly 100,000 per month needed to keep up with growth in the working age population.
The unemployment rate is forecast unchanged at 3.7% for a third straight month.
August job growth could, however, fall short of expectations because of a seasonal quirk related to students leaving their summer jobs and returning to school. Over the past several years, the initial August job count has tended to exhibit a weak bias, with revisions subsequently showing strength.
Other factors favoring slower job growth include declines in both the Institute for Supply Management’s manufacturing and services industries employment measures in August. In addition, global outplacement firm Challenger, Gray & Christmas reported a 37.7% jump in planned job cuts by U.S-based employers in August.