U.S. hiring took a breather in August, as job gains of 156,000 fell short of expectations and wage growth continued to disappoint.
The labor market had appeared to pick up the pace with back-to-back months of more than 200,000 new jobs. Employers slowed down in August, pushing the unemployment rate to 4.4% from 4.3%. Economists were looking for a strong report with 180,000 new jobs. Meanwhile, the Bureau of Labor Statistics revised the prior two months lower. The economy added 210,000 jobs in June, down from 231,000. Job gains in July dropped to 189,000 from 209,000. The labor force participation rate was unchanged at 62.9%.
Wage growth remained struck at 2.5% over the past year. Average hourly earnings ticked 3 cents higher to $26.39 last month. The average workweek slipped to 34.4 hours from 34.5 hours.
Though the headline number missed the mark, the August jobs report mostly satisfied investors who see the U.S. economy growing at a steady clip. The report also might raise the odds that the Federal Reserve will delay its next interest rate hike until 2018. Officials at the central bank have expressed trepidation over inflation growth that has lagged behind their target of 2%. Fed Chair Janet Yellen has also focused on slack in the labor market, highlighting slow wage growth and elevated levels of underemployment.
“It certainly was a disappointment, but August is known to have some seasonal issues around it,” said Eric Wiegand, senior portfolio manager at U.S. Bank Private Wealth Management. “Investors will tend to look through this over the extended period.”