04 Sep Employers added 173,000 jobs in Aug., jobless rates falls to 5.1%

By: Paul Davidson, USA Today

Payroll growth slowed in August as employers added 173,000 jobs in a key report that could help the Federal Reserve decide whether to raise interest rates later this month.

The unemployment rate, which is calculated from a separate survey of households, fell from 5.3% to 5.1%, lowest since March 2008.

Economists surveyed by Bloomberg expected employment gains of 218,000, according to their median forecast.

Businesses added 140,000 jobs last month, fueled by strong advances in health care, professional and business services, and leisure and hospitality. Federal, state and local governments added 33,000.

Partly offsetting the disappointing report is that job gains for June and July were revised up by a total 44,000.

Wage growth picked up moderately as average hourly earnings rose 8 cents to $25.09 after dipping in June, and are up 2.2% the past year, slightly faster than the tepid 2% pace so far in the recovery. The Fed is seeking signs of faster wage that would indicate stronger inflation as it considers increasing its benchmark interest rate.

Although pay growth is improving, “It’s not where it should be,” Deputy Labor Secretary Chris Lu said in an interview, noting the Obama Administration continues to seek a higher federal minimum wage and expanded overtime pay.

The report is the most significant the Fed will review before its September 16-17 meeting. Until recent financial market turmoil, Fed officials had been signaling there was at least a reasonable chance they would raise the fed funds rate at the gathering for the first time in nine years.

At least one Fed policymaker indicated last week a rate hike is now less likely, though Vice Chairman Stanley Fischer said economic reports in coming days will be pivotal. Some economists said job gains of at least 250,000 in August were needed to coax Fed policymakers into taking a step that could further roil jittery markets.

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